Senate Hearing, 108TH Congress - Faa Reauthorization

S. HRG.
108933
FAA REAUTHORIZATION
HEARING
BEFORE THE
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
APRIL 10, 2003
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
JOHN MCCAIN, Arizona, Chairman

TED STEVENS, Alaska ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana DANIEL K. INOUYE, Hawaii
TRENT LOTT, Mississippi JOHN D. ROCKEFELLER IV, West Virginia
KAY BAILEY HUTCHISON, Texas JOHN F. KERRY, Massachusetts
OLYMPIA J. SNOWE, Maine JOHN B. BREAUX, Louisiana
SAM BROWNBACK, Kansas BYRON L. DORGAN, North Dakota
GORDON SMITH, Oregon RON WYDEN, Oregon
PETER G. FITZGERALD, Illinois BARBARA BOXER, California
JOHN ENSIGN, Nevada BILL NELSON, Florida
GEORGE ALLEN, Virginia MARIA CANTWELL, Washington
JOHN E. SUNUNU, New Hampshire FRANK LAUTENBERG, New Jersey
JEANNE BUMPUS, Republican Staff Director and General Counsel
ROBERT W. CHAMBERLIN, Republican Chief Counsel
KEVIN D. KAYES, Democratic Staff Director and Chief Counsel
GREGG ELIAS, Democratic General Counsel
(II)
CONTENTS
Page
Hearing held on February 12, 2003 ....................................................................... 1
Statement of Senator Brownback ........................................................................... 6
Statement of Senator Fitzgerald ............................................................................ 4
Statement of Senator Lautenberg .......................................................................... 42
Statement of Senator Lott ...................................................................................... 2
Statement of Senator McCain ................................................................................. 1
Statement of Senator Rockefeller ........................................................................... 5
Statement of Senator Smith ................................................................................... 3
Statement of Senator Stevens ................................................................................ 34
WITNESSES
Blakey, Hon. Marion C., Administrator, Federal Aviation Administration ........ 7
Prepared statement .......................................................................................... 9
Dillingham, Gerald L., Director, Civil Aviation Issues, U.S. General Account-
ing Office ............................................................................................................... 16
Van De Water, Hon. Read C., Assistant Secretary for Aviation and Inter-
national Affairs, Department of Transportation ............................................... 11
APPENDIX
Response to written questions submitted to Hon. Marion C. Blakey by:
Hon. Maria Cantwell ............................................................................................... 61
Hon. Ernest F. Hollings .......................................................................................... 53
Hon. Daniel K. Inouye ............................................................................................. 54
Hon. Frank Lautenberg ........................................................................................... 62
Hon. John McCain ................................................................................................... 45
Hon. Ron Wyden ...................................................................................................... 59
Response to written questions submitted by Hon. John McCain to:
Gerald L. Dillingham ....................................................................................... 72
Hon. Read C. Van De Water ............................................................................ 64
(III)
FAA REAUTHORIZATION
THURSDAY, APRIL 10, 2003
U.S. SENATE,
COMMITTEE ON COMMERCE, SCIENCE,
TRANSPORTATION, AND
Washington, DC.
The Committee met, pursuant to notice, at 9:30 a.m. in room SR
253, Russell Senate Office Building, Hon. John McCain, Chairman
of the Committee, presiding.
OPENING STATEMENT OF HON. JOHN MCCAIN,
U.S. SENATOR FROM ARIZONA
The CHAIRMAN. The purpose of todays hearing is to consider S.
824, the Aviation Investment and Revitalization Act. This legisla-
tion was introduced earlier this week by Senators Lott, Rockefeller,
Hollings, myself. S. 824 would authorize the Federal Aviation Ad-
ministration for 3 years, authorize funding levels for the FAAs
major programs, authorize funding for aviation security capital
costs at airports, and make policy changes to a number of the
FAAs and the Department of Transportations aviation programs.
It is our intention to mark up this bill soon after we return from
the April recess and to have it ready for floor consideration during
May. I believe that this is a critically important bill for the aviation
community, which is facing very, very difficult times. The industry
is in a crisis that deeply concerns this committee. However, we
must be equally concerned about the FAA and its programs, and
work to ensure that our Nations aviation system has proper over-
sight.
Our aviation system has been the leader in safety and efficiency.
We must act this year to ensure that this remains the case. This
bill continues the investments in the aviation system that began
under AIR21. We have made great progress in capacity and infra-
structure improvements, but we must work to ensure that infra-
structure is further improved, our safety is maintained, and the se-
curity of our aviation passengers remains a priority.
We must also ensure that the FAA manages its resources wisely.
This bill includes provisions first proposed by former Administrator
Garvey and endorsed by the current administrator to improve FAA
management. The FAAs management of its programs, especially
its modernization efforts, will continue to be of particular concern
to this committee.
I am also concerned about the diversion of Airport Improvement
Program funds away from safety and capacity projects to fund se-
curity improvements. While security is paramount, Congress never
intended a substantial portion of AIP funds to be applied to secu-
(1)
2
rity projects. To address this, S. 824 includes a new aviation secu-

rity capital fund to finance such security costs and to reduce the
funding pressure on AIP.
Finally, I remain concerned about competitive issues in the air-
line industry. While the industry has strong low-cost carriers which
act to ensure a competitive marketplace, there are still competitive
issues that must be addressed. I look forward to working with the
members of this committee on these issues as we move forward
with this bill.
I want to thank Senator Lott, the Chairman of the Aviation Sub-
committee, for his hard work, as well as Senator Hollings and Sen-
ator Rockefeller and others who have been involved in this issue.
And I now recognize Senator Lott, who is the Chairman of the
Aviation Subcommittee, for his comments, and then Senator Smith
and Senator Fitzgerald.
STATEMENT OF HON. TRENT LOTT,
U.S. SENATOR FROM MISSISSIPPI
Senator LOTT. Thank you, Mr. Chairman, for having this hearing
today. It keeps us on track to move forward toward getting this leg-
islation completed as soon as possible so that we do not get caught
in the traffic jam as we get into the summer and the fall. The legis-
lation, of course, does expire at the end of Fiscal Year 2003, so it
will be very important that we go ahead and complete this action.
It has been a pleasure working with Senator McCain. I have en-
joyed working with Senator Rockefeller and Senator Hollings to de-
velop this preliminary bipartisan bill that will reauthorize FAA.
We hope that when we hear from the Administration officials today
we can further consider any necessary modifications to the legisla-
tion and be ready to go to a mark-up when we return from the
Easter recess, as the chairman just said, and that would make it
possible for us to possibly have this legislation considered later on
that week, or the first week in May.
I want to thank the Administration for coming forward with
their recommendations. While we obviously would not agree 100
percent with those recommendations, it was important we hear
from the Administration before we developed the legislation, and
you have cooperated with that, and I thank our witnesses here
today and the Administration for doing that.
This bill does include numerous provisions that will help sustain
and enhance safety, security, efficiency, and competition in the na-
tional aviation system. It will give some reliability, because it will
be a multiyear program. We need to discuss exactly how many
years that should be, but that in itself gives reliability to the indus-
try and some certainty that I think would be helpful.
We are particularly interested in the Airport Improvement Pro-
gram. It is very critical to our airports as they plan for construction
projects such as runways, taxiways, aprons, noise abatement, land
purchase, safety, andsince 9/11security. As we have discussed,
$500 million of the IAP funds have gone into security. There has
been some suggestion that that amount would be needed again this
year. Senator McCain and I have both indicated we have serious
reservations about that, because the AIP funds have a purpose,
and if we divert $1 billion to security, then we are putting a lot
3
of other programs on hold, or delaying them, which could create

other problems, including safety.
The Essential Air Service program is a very important part of
the AA reauthorization. Right now we are basically saying we will
extend the existing program, but we are going to need to look at
that and work with the Administration, work with the Senators on
this committee on both sides of the aisle to come up with some im-
provements.
For instance, we do know that the total passenger traffic at EAS
subsidized communities decreased by 20 percent since 1995, and
the median number of passenger enplanements fell to an estimated
10 per day, just over three passengers per flight.
Now, I am from a State where obviously EAS is important. In
order to have the total package of access for our constituents, some
of these smaller airports do need this EAS program, but we need
to look at how much is going to be authorized, how much of a local
match is going to be required. The Administration actually consid-
ered, or recommended 25 percent local match except for commu-
nities that were more than 210 miles from the nearest large or me-
dium hub, in which case it would be 10 percent match.
I do personally support the idea of some match. I think airports,
these local airports provide a benefit to the local people, it provides
jobs. They can and should make some contribution to the program,
but that is an area where when you look at the make-up of the
Committee, a West Virginia Senator, Maine, Mississippi, North Da-
kota, Hawaii, Alaska, we all have very strong feelings about how
this program should be run.
I would also like to see the continuation of the Small Community
Air Service Development Pilot Program. I think it has worked well.
In Ms. Van de WatersI believe it was your testimony earlier
you said we only authorized 40 communities of $20 million, and ba-
sically you have committed to that and can go no further. Those
grants have, I think, provided some incentives for these commu-
nities like one in my own State to do more on their own and use
this program and benefit from it, and so I hope we can look at that,
but the most important thing, Mr. Chairman, is for us to have this
hearing, hear further from the Administration, have a chance to
ask some questions, and then move toward a package that we can
report out and send to the floor. And I thank you again for giving
me the opportunity to work hard in this area and have the hear-
ings we have had. I believe we have laid the groundwork to
produce a good bill.
Thank you, Mr. Chairman.
The CHAIRMAN. Well, I congratulate you for outstanding work,
Senator Lott. Senator Smith.
STATEMENT OF HON. GORDON SMITH,
U.S. SENATOR FROM OREGON
Senator SMITH. Thank you, Mr. Chairman. This is a very impor-
tant hearing to reauthorize the Federal Aviation Administration. It
is my belief that this bill must promote safety and economic growth
while improving aviation capacity and mobility. I want to urge my
colleagues that as we review the FAAs major Federal programs we
need to provide the necessary authorization for funding for trans-
4
ponder landing systems and radar coverage to small community

airports.
For example, in Central Oregon, adequate radar coverage is be-
coming a very significant issue to users of sixand I repeatsix
nearby airports which support both commercial and general avia-
tion users. Flight safety has become a major regional concern, and
Central Oregons lack of digital radar coverage is seen as a liability
to further growth in commercial carriers, and continues to hamper
air accessibility to a large geographical region. It frequently experi-
ences inclement weather.
Currently there is no radar below 8,000 feet in the entire region,
and only one aircraft can be in the air space under IFR conditions
at a time. The FAA began survey and design work for a Central
Oregon digital radar in Fiscal Year 1999. That site study is now
complete, and the installation of the facility is now ready to pro-
ceed. It is my understanding that the FAA Air Traffic Division has
decided that Central Oregon does not meet the criteria for pur-
chase and installation of the radar in the region, and bases this in-
formation, I believe, on inaccurate FAA data, so I would plead with
the Secretary, Secretary Blakey, to help me resolve this. The longer
the FAA delays the radar to be installed and operated in Central
Oregon, the more dangerous that air space is going to become.
I would like to make sure we are on the same page as to the cri-
teria by which this decision was arrived at, because I see a real
problem in Central Oregon and would like to resolve it. Thank you,
Mr. Chairman.
The CHAIRMAN. Thank you. Senator Fitzgerald.
STATEMENT OF HON. PETER G. FITZGERALD,
U.S. SENATOR FROM ILLINOIS
Senator FITZGERALD. Thank you, Mr. Chairman, and thank you
for convening this hearing. Ms. Blakey, thank you so much for
being here, and Ms. Van de Water and Dr. Dillingham. We look
forward to hearing from you. I think this hearing is extremely im-
portant, as I believe how we go about reauthorizing the FAA and
what path we choose to take in expanding capacity for aviation in
this country is extremely important.
As you know, this has been an enormous issue in my State of Il-
linois, and particularly in the city of Chicago. Sometimes I feel like
I am more an aviation commissioner than a Senator coming from
the State of Illinois, but there are big issues here, and one of the
concerns I would say at the outset that I have about the proposed
legislation is that I am afraid we may be going too far in the direc-
tion of just expanding existing airports.
I do not think we want to foreclose the possibility of building new
airports in this country. I wonder, if this legislation had been in
place, whether Dallas-Fort Worth would have ever been built, or
Denver would have ever been built. We might have just expanded
Love Field and expanded Stapleton, and I do not think that those
would have been the right solutions.
Now, no aviation hearing in the Commerce Committee would be
complete if I did not bring up OHare, but this is germane, and it
is directly on point, because in recent days, The Chicago Tribune
ran a front page article that disclosed that the city of Chicagos
5
own studies and own modeling, that they have now filed with the
FAA with respect to OHare, show that the whole OHare plan that
they tried to lock into law last year would not get anywhere near
the capacity they were promising, and it would not have cut down
delays.
In fact, they stopped their modeling at a certain point because
delays got so bad, the runways would be so close together that
three of them would be closed down in bad weather, and the prob-
lem with getting more capacity out of existing airports, at least in
the case of OHare, is they do not have enough land. You need a
lot of space to get more capacity, and in the case of OHare they
only have 8,300 acres. They were going to put the runways 1,200
feet apart.
Well, those runways are going to have to be shut down in bad
weather, and certainly you have the operators of existing airports,
wherever they are in this country, they do not want new airports
coming in, and since deregulation, passenger travel has gone up
something like 200, 300, 400 percent, but we have built only Dal-
las-Fort Worth and Denver International Airport. We have not
added new airports.
So I am very concerned about the issue of, are we going to build
some new airports? We desperately need capacity. I know I have
been a crusader the last few years on Chicago, that we get more
capacity more quickly at far less cost, about a third less cost, by
going forward with a third airport, so I hope we do not go so far
down the road that we are foreclosing the possibility for additional
airports in this country, and I know there are lobbies that do not
want additional airports. That includes the hub carriers who have
a dominant market position in the city, or maybe the Airport Oper-
ators Association, which I understand was very involved in drafting
this bill. They do not want new airports, but we have got to be very
careful here, because this is a very important issue.
And with that, Senator McCain, thank you very much. Inciden-
tally, I did leave on every Senators desk a couple of articles on
that issue, because we did the right thing by not passing that bill
last year. We would have locked into law a big waste of money with
respect to OHare.
Thank you.
The CHAIRMAN. Thank you very much. It is always good to get
an update on the status of OHare Airport, and we thank you, Sen-
ator Fitzgerald. Many of us have to use that airport, so we are very
pleased.
Senator Rockefeller.
STATEMENT OF HON. JOHN D. ROCKEFELLER IV,

U.S. SENATOR FROM WEST VIRGINIA
Senator ROCKEFELLER. I will be brief. I have my information on
OHare, and I tucked it right over here. I am very proud to be a
cosponsor of S. 824. I really enjoy working with Senator Lott as my
new compatriot, and there is a lot of good stuff, the fact that EAS
is continued. But on the other hand, Senator Lott and I, we have
sort of agreed to talk about the program as we go forward. We are
going to work together on that.
6
I like the fact that AIDPor the Small Community Air Service
Development Pilot Program nowis continued and expanded, and
I look forward to working on this, Mr. Chairman. We did this once
before, and we can do it again. We have to protect all our commu-
nities.
The CHAIRMAN. Thank you, Senator Rockefeller. Thank you for
your outstanding work on this legislation, as you have been on
many other aviation issues before this committee.
Welcome, Ms. Blakey.
Senator BROWNBACK. If I could, Mr. Chairman
The CHAIRMAN. I apologize, Senator Brownback. I thought you
were still in mourning because of Kansas loss and I did not know
if you were ready to speak yet.
[Laughter.]
The CHAIRMAN. I apologize.
STATEMENT OF HON. SAM BROWNBACK,
U.S. SENATOR FROM KANSAS
Senator BROWNBACK. But I am still celebrating that Arizona vic-
tory we had.
[Laughter.]
Senator BROWNBACK. That was one of the richest ones we have
had.
The CHAIRMAN. That is what you get.
Senator BROWNBACK. I thought that is why you overlooked me,
you were still mad about that.
[Laughter.]
Senator BROWNBACK. Thank you, witnesses, for being here, and
I thank the chairman for holding the hearing. I appreciate this. It
is an important topic. I want to focus on one narrow area, continu-
ation and research, to be able to continue to lead the world in the
aviation work that we do.
The United States has revolutionized the way that people travel,
developing new technologies and aircraft to move people more effi-
ciently and more safely around the world. Past Federal investment
in aeronautics research and development has benefited the econ-
omy and national security of our Nation. The total impact of civil
aviation on our economy exceeds $900 billion, 9 percent of the gross
national product. Future growth in civil aviation will be increas-
ingly constrained by concerns related to aviation system safety, se-
curity, aviation system capabilities, aircraft noise, emissions, and
fuel consumption.
Last year the Commission on the Future of the U.S. Aerospace
Industry recommended to Congress that the United States bolster
investment in aeronautics and aerospace research. U.S. leadership
in aerospace is threatened by our international competitors. The re-
vitalization and coordination of our efforts to maintain leadership
in aeronautics and aviation are critical and must begin now. Global
leadership in aerospace is a national imperative.
I have worked with Senator Hollings on introducing a bill re-
garding this issue. I would just point out to the Chairman and my
colleagues on the Committee, the aviation manufacturing industry
is centered in Wichita. They are increasingly concerned about their
loss of global edge in the research and the development of cutting-
7
edge technologies. They are fearful, that they are seeing loss of
these jobs systemically going to places willing to invest in the re-
search and development of new engines, new wings, and new prod-
ucts to come along.
I think we have got to match and meet that challenge for us to
be able to sustain our leadership in the field that we started 100
years ago with the Wright Brothers. It is important that we invest
in that research agenda, and invest heavily.
The CHAIRMAN. Thank you, Senator Brownback.
Ms. Blakey, who is the Administrator of the Federal Aviation Ad-
ministration, and Ms. Read Van de Water, Assistant Secretary for
Aviation and International Affairs, U.S. Department of Transpor-
tation, and Dr. Gerald Dillingham, Director of Physical Infrastruc-
ture Issues, General Accounting Office.
Could I ask the witnesses as a part of their statement to address
this issue that all of us have alluded to, and that is this tension
now between funds for security and funds for continued aviation
improvement and expansion. I think that is a major concern and
challenge we are going to have to deal with.
Welcome back, Ms. Blakey. Thank you, and please proceed, and
all of your written statements will be made a part of the record.
STATEMENT OF HON. MARION C. BLAKEY, ADMINISTRATOR,
FEDERAL AVIATION ADMINISTRATION
Ms. BLAKEY. Thank you very much, and I do want to say how
pleased I am to be back here able to discuss the reauthorization of
the FAA with you all again.
Chairman McCain, Senator Lott, all of those on the Committee
who have worked so very hard on this reauthorization effort, I do
want to say thank you, and I am pleased to be able to discuss the
Administrations proposal, The Centennial of Flight Aviation Au-
thorization Act, or Flight100.
I would like to start by thanking Secretary Mineta, thanking
Deputy Secretary Michael Jackson, Read Van de Water, Jeff
Shane, and so many people in the policy shop who worked hard on
this long before I got to FAA. A great deal of thought has gone into
the Administrations proposal, and so I am pleased to have a
chance to capitalize on that.
I was particularly pleased to see that the leadership of this com-
mittee has fielded a reauthorization proposal as well. I think it is
very striking that while we have not had an opportunity to analyze
it in real depth, there are many areas of shared vision, of like con-
cerns in these proposals, and I think it gives us a tremendous way
to work together to build on those concerns.
I would particularly highlight there the issue of increased sup-
port for small airports, that is very clear in both of these bills, con-
cern for the way we are developing our flight service from that
standpoint, and our effort to reduce aviations impact on the envi-
ronment both through having a coherent, streamlined process and
looking for ways, through research and elsewhere, to mitigate the
effect.
I think there is also a shared concern on all of our parts to ad-
dress Senator McCains concern and all of your concern about secu-
8
rity in that we do understand that AIP funds are being tapped and
stretched to address security issues. As many of you know, roughly
$561 million last year went into additional security-related projects
at the airport. We are prepared this year to come forward with
similar sums.
It is very clear from the early applications that we are getting
from our airports around the country that that is their need, that
is their request, but I think we all understand at the same time
that while we are trying to get over a certain hump at this point
in terms of security needs, we cannot sustain it at this level within
AIP funding and still meet the kind of ongoing maintenance, much
less capacity and safety improvement, that we all believe AIP
funds need to address, so I think it is a shared area of concern.
Now, having said that, let me briefly talk for a moment about the
proposal I know the best, and that is Flight100, the Administra-
tions proposal. It also builds on AIR21, and I think this is a very
fundamental point here, because this committee and the Congress
did formidable work with AIR21. That statute resulted in real in-
novations in safety, and the environment, and significantly in-
creased funding. I think we are very much on board with saying
that provides the foundation and both the continuity and stability
that I think the industry needs right now in terms of moving for-
ward.
Given the state of the aviation industry, I would make one point
right up front. The Administrations proposal does not have any ad-
ditional new taxes, no new economic demands on the industry, no
financial burdens on the flying public that are additional, and I
think that is important to say.
We are following the lead of AIR21 elsewhere and, of course,
that means first and foremost we are highlighting improvements in
safety. The funding levels there will allow us to support important
infrastructure improvements, safety initiatives, and yes, important
safety research. I was very pleased to hear Senator Brownbacks
concern about research broadly, and I would highlight that as a
feature of our bill.
Second, Flight100 does expand environmental streamlining ini-
tiatives really by providing, I think, greater efficiency in that re-
view. This committee has identified this as a real priority, and we
see it as a cornerstone of Flight100. Our proposal gives the FAA
the ability to look at critical safety recommendations in a timely
manner when it comes to our airports, and designate those projects
as priorities in terms of environmental review.
It also is a way of dropping back protracted decisions. I think if
we all look back on the summer of 2000 gridlock, we will all ac-
knowledge that a lot of that very slow decisionmaking really was
a major contributor to the gridlock, and we have got to avoid it.
I want to, though, go back to commending the Committee on tak-
ing the lead on this issue of environmental streamlining both in
AIR21 and subsequent deliberations you have had, and now in
your current bill. I do think this is very important.
We are also proposing some new initiatives that I would like to
see the Committee consider strongly, and they have to do with
mitigating the effects of not just noise, but emissions when it comes
to aviations impact on the environment. For example, we propose
9
to establish voluntary programs to reduce aviation emissions by

converting airport infrastructure, and here I am talking about vehi-
cles, any of the sort of power plants that could contribute to this,
and airport-owned ground support equipment to new low-emission
technologies.
We also hope to increase prospective homebuyers awareness of
potential noise before they move close to airports. They need to
know from Federal lenders what the noise factors are, and this
needs to be something that we require.
We are also looking to increase our commitment on the capacity
front by proposing adjustments in AIP formulas that allow us the
discretion to focus resources on projects of national significance. We
think it is very important that we ensure that needed capacity-en-
hancing projects at the Nations most congested airports will be
funded by an increasing amount of discretionary dollars, and I
would like to highlight that again in our bill.
We have got an important opportunity. I think we have all
talked informally about this together. With the decrease in traffic,
we have a chance to catch up from a capacity standpoint, and we
need to take that opportunity.
Then finally, just as in the reauthorization proposal that you
have introduced this week, assistance to smaller airports is a focal
point of Flight100. I understand the pressing needs of these air-
ports. You all have talked in great depth about this, and I do ap-
preciate the fact that we have all got to step forward on it. Our
proposal provides additional money to help smaller airports
through the kinds of market fluctuations, and the periods of declin-
ing traffic that they are experiencing right now.
Non-hub airports will be permitted to use entitlement dollars to
fund security-related requirements as well, and here I am talking
about, ongoing operating problems. Small airports should not be re-
quired to choose between improving airport security and funding
other important projects.
Mr. Chairman, I understand this committee is planning a very
aggressive reauthorization schedule. Senator Lott has talked with
me about this in detail, and I am delighted. I would like to end my
remarks simply by emphasizing the Administrations commitment
to work closely with you for our shared goals in aviation.
Thank you very much.
[The prepared statement of Ms. Blakey follows:]
PREPARED STATEMENT OF HON. MARION C. BLAKEY, ADMINISTRATOR,
FEDERAL AVIATION ADMINISTRATION
Chairman McCain, Senator Hollings, members of the Committee, thank you for
the opportunity to appear before you today to discuss the Administrations proposal
to reauthorize our aviation programs. Recently, I testified before you on the state
of the Federal Aviation Administration (FAA). The question I was most frequently
asked at that hearing was when the Administrations reauthorization proposal
would be made available. I am happy to report that on March 25, 2003, Secretary
Mineta sent to Congress the Administrations reauthorization proposal, the Centen-
nial of Flight Aviation Authorization Act, or Flight100.
I would very much like to thank both Secretary Mineta and Deputy Secretary Mi-
chael Jackson for their tireless efforts in developing and clearing this proposal. I
would also like to thank them for challenging all of us at the Department of Trans-
portation (DOT) to be Safer, Simpler, and Smarter. These three principles developed
by the Secretary not only form the basis of Flight100, but they also describe a De-
10
partment that puts a premium on performance, flexibility, and accountability. And
we at FAA intend to do our part to meet the Secretarys challenge.
I am also grateful for the dedication and input of Under Secretary Jeff Shane and
his Policy office since, when my tenure as Administrator began, the development of
a reauthorization proposal was already under way. To that end, we believe the Ad-
ministrations proposal will serve as a strong foundation for the development of re-
authorization legislation.
When the Wendell H. Ford Aviation Investment and Reform Act for the 21st Cen-
tury (AIR21) was passed almost three years ago, it contained some truly innovative
provisions that improved safety, airport development and system efficiency. It was
landmark legislation that has provided a firm foundation upon which to build. The
Administrations reauthorization proposal does just thatit takes its direction from
AIR21 and proposes a four-year authorization that would continue investment in
safety, air traffic control modernization and operations, airport capacity improve-
ments, and environmental stewardship.
With AIR21 as a foundation, let me take a moment to describe for you the sub-
stance of our proposal.
Funding Levels
Because safety remains our number one priority, continued investment in the
aviation system is critical. Although the devastating events of September 11th con-
tinue to impact the number of people flying in this country, recovery of the system
is inevitable. As I discussed with you when I last testified before this committee,
the temporary downturn in air travel affords us a great opportunity to continue to
focus on increasing airport capacity without unacceptable disruption to the system.
Under AIR21, the annual authorized levels for the Airport Improvement Program
(AIP) increased substantially, and FAAs other accounts also received appreciable in-
creases. The funding levels the Administration recommends for AIP, Facilities and
Equipment (F&E), and FAA Operations will support the achievement of several
goals. They maintain the level of investment for major airport capacity projects that
provide great benefits to the National Airspace System (NAS). They enable us to
continue to update the NAS infrastructure, expand air traffic control automation
and communications tools, and implement needed operational capability and risk-
mitigating precision landing navigation. They support implementation of FAAs
Operational Evolution Plan (OEP) and efforts to accelerate airspace redesign, sector
reconfiguration, and chokepoint solutions.
Although the proposed funding level for Research, Engineering and Development
represents a decrease from current levels as a result of the transfer of security tech-
nology responsibilities to the Transportation Security Administration (TSA), Flight
100 reflects our continued focus on safety in FAAs research program. FAA also ben-
efits from a significant amount of forward-looking research funded by the National
Aeronautics and Space Administration (NASA) that is aimed at improving the long-
term safety, security, and efficiency of the national airspace.
I believe these funding recommendations are sound and represent a strong signal
that investment in safety and in the NAS is critical to a healthy economy and the
future of the country.
Programmatic Changes
With respect to the AIP, Flight100 places major emphasis on helping smaller air-
ports and projects of national significance. Therefore, the Administration proposes
a restructuring of the formulas and set-asides to allow more funds to be targeted
to those airports and projects with the greatest dependence on Federal assistance.
In Fiscal Year 2004, our proposal would transfer more funding than in Fiscal Year
2003 to small airports. These airports are essential to the vitality of the NAS and
have limited funding options other than Federal assistance. We estimate this fund-
ing shift to be approximately $87 million. We also recommend simplifying the grant
formulas by eliminating unnecessary or outdated set-asides. For example, the set-
aside for the Military Airport Program was created to ensure funding when it was
a new concept and it was unclear if it would compete well for grant dollars. Today,
the program is well established and its airports routinely receive more than the
amount guaranteed by the existing formulas. The changes we propose will have the
effect of increasing the amount of discretionary funding available, which we believe
is essential to help fund the key capacity projects in our national system that we
all agree are necessary to prevent future gridlock.
Just as the Committee leadership has identified environmental concerns as a pri-
ority in their reauthorization proposal, the Administrations environmental concerns
are cornerstone of Flight100. While FAAs primary mission is to ensure a safe and
efficient NAS, we also take our environmental responsibilities quite seriously. The
11
environmental initiatives in this proposal will contribute to continued success of our
investment in safety and capacity projects by providing for prompt and more effec-
tive environmental review of significant projects while continuing to exercise strong
environmental stewardship. I know that environmental streamlining is a top pri-
ority for this committee and I look forward to working with you to meet our mutual
goal.
We also propose new initiatives to mitigate the impacts of aviation emissions and
noise. For example, we propose to establish voluntary programs to reduce aviation
emissions by converting airport infrastructure, airport vehicles, and airport-owned
ground-support equipment to new low emission technologies. In addition, our noise
initiatives include using some of the AIP noise set-aside for research aimed at re-
ducing community exposure to aircraft noise or emissions. We also hope to increase
prospective homebuyers awareness of areas near airports that are exposed to air-
craft noise by requiring federal lenders to inform prospective homebuyers of prop-
erties within airport noise contours.
The aviation insurance program authority in chapter 443 of title 49 is scheduled
to expire at the end of 2003. In the past, reauthorizations of the program were en-
acted periodically and, if the program lapsed between authorizations, the lapses
were brief and without incident. In the current climate, however, a lapse in the de-
fense and foreign commerce related program could have extreme consequences. To
avoid that future possibility, Flight100 would repeal the periodic renewal require-
ment of that portion of the program, thereby making it permanent. The provisions
that enable DOT to offer insurance to airlines flying within the United States would
be extended for a two-year period and would be subject to the reauthorization proc-
ess at that time. Of course, the actual provision of insurance will remain at the dis-
cretion of the President, based on a Presidential Determination Order.
Our proposal sets forth certain structural reforms that could assist agency efforts
to transform air traffic control and its supporting functions into an effective, per-
formance-based Air Traffic Organization. The structural reform provisions in our re-
authorization proposal would reinforce this goal by clarifying and enhancing man-
agement reforms that Congress has already put in place for the FAA.
Increasing FAAs International Profile
Recently, I made a commitment to you, the agency, and the aviation community
that I would work to increase the FAAs international profile. We all have an obliga-
tion to continue to look for innovative ways to use our resources to improve world-
wide aviation safety while maintaining our leadership role in the international avia-
tion community. Toward that end, I recently created a separate International Office.
Mr. Chairman, although FAA faces numerous international challenges over the next
five years, I am confident that we will succeed in increasing our leadership role.
Defenders of the Homeland
Finally, for over a year and half Congress, and particularly this committee, has
appropriately focused on security matters. At this time, I would like to note that
the shift of FAAs former security programs to the TSA was a smooth one. FAA con-
tinues to work closely with TSA even as TSA has transitioned from the Department
of Transportation to the Department of Homeland Security. Although FAAs role
with respect to security has changed, we remain defenders of the Homeland in a
very real sense. Security remains a vital component of safety. The current threat
level means we all have a role to play in protecting our country. On behalf of the
FAA, I am committed to continuing to work closely with TSA to protect our country
from having aviation used against us as a weapon of mass destruction.
Conclusion
In conclusion, I believe that the Administrations proposal will serve as a strong
foundation for aviation reauthorization and I look forward to working with this com-
mittee and industry stakeholders towards the development of legislation.
This concludes my prepared statement. I am happy to answer your questions at
this time.
The CHAIRMAN. Thank you, Ms. Blakey. Ms. Van de Water.

STATEMENT OF HON. READ C. VAN DE WATER, ASSISTANT
SECRETARY FOR AVIATION AND INTERNATIONAL AFFAIRS,
DEPARTMENT OF TRANSPORTATION
Ms. VAN DE WATER. Thank you, Mr. Chairman, Senators. I am
pleased to be here this morning to discuss one part of the reauthor-
12
ization proposal, and that is that of Essential Air Service and serv-
ice to small communities, a very high priority for the Administra-
tion.
My experience involving the EAS program has reinforced for me
the absolute need to reform how the Government supports small
community service and transportation. Without fundamental
changes to the way the Federal Government addresses these trans-
portation issues, communities will have little, if any, control over
the service that is provided, and the service in many cases may be
only partially responsive to the community needs.
Moreover, there is no doubt that it will be increasingly more ex-
pensive for the Government to support these services. Even before
September 11, which affected air service throughout the country,
but certainly small communities greater than others, the cost
under the EAS program had grown tremendously, but the use of
the services still remained poor.
Since September 11, we have received 44 notices of the last serv-
ice at a community which will trigger a hold-in subsidy for most
of those communities. There are about 70-some communities left
that have single-carrier service that could enter the EAS program
statutorily at any time, and we have no say-so over that.
In the Flight100 proposal that the Administrator has outlined,
the Administration has proposed a comprehensive new program for
small community transportation service that will change both the
dynamics and the participants in the process, and all for the better,
we think. The key substantive reforms in the program go to the
heart of what has been recognized as a significant omission in how
we address small community transportation, and that is participa-
tion by the communities themselves.
First, we will ask communities to participate directly in devel-
oping a plan for responding to their transportation needs. Through-
out the history of the program, the Federal Government has deter-
mined what services the communities will receive, and judging
from the number of calls I receive from people in the community
and people here in Washington, most of them do not like it.
Under our proposed reform for small community transportation
service, communities for the first time will take a leadership role
in designing the services that best meet their individual commu-
nitys needs, rather than the Federal Government. We think that
communities themselves are in the best position to know their
needs, and their ability to support the service to meet those needs.
By participating in the design of the services provided, the com-
munity and the Government can help ensure more effective deci-
sions on how best to address those needs. Our experience with the
Small Community Air Service Development Pilot Program has con-
firmed the strong desire of communities to be active participants
in this process. And a GAO report on small community service that
I suspect will be addressed momentarily, also emphasized that
service initiatives are the most successful when the communities
have had active participation in the process.
Second, we want communities to have flexibility in meeting their
transportation needs. Traditional EAS service has been one-size-
fits-all, two or three round trips a day to a designated hub with a
small aircraft. In the early stages of EAS, that system worked rel-
13
atively well, but as a result of the growth and evolution of air serv-
ice and over the 25-years since, including expanded hub-and-spoke
systems, the recent growth of low-fare carriers and changes in re-
gional air carrier services, this model is no longer a good template
for us to use.
Our proposal provides communities a broader range of options
available to address their air service needs, including less frequent
or charter service, use of smaller aircraft, ground service alter-
natives, and regional service initiatives. Again, our experience with
the pilot program has been very instructive. Many communities
recognize that their needs have changed, and that a broader range
of options may be the difference between successful service and
service that is rarely used, as, in general, the EAS service is now.
Greater flexibility will make it possible for communities and the
Government to respond more effectively and efficiently with the
service the community needs.
Third, communities will be asked to participate financially in
their service plans. We know this is the most controversial part of
our proposal, but we believe that the service at small communities
will be more effective if the community is a full partner with the
Government, and in addition to drawing up the proposal and tak-
ing a leadership role in that side, we ask for support for that serv-
ice, support not only in ridership, but also financially.
As a stakeholder in the transportation, the community gains
greater control over how the service is provided, and its potential
for success and, of course, the amount of community contribution,
as you have seen in our proposal, would be determined by the de-
gree of isolation.
In last years grant process, over 70 percent of the communities
in the small community pilot programs were prepared to contribute
at least 10 percent of the proposed initiative. Nearly half were pre-
pared to contribute at least 25 percent. I want to emphasize that
we recognize that there are certain circumstances under which a
community might not be required to make a financial contribution
due to special geographic considerations, and we would be prepared
in the Secretarys Office to address those on a case-by-case basis.
In summary, under our new program, all communities that are
now part of the EAS program would be eligible to stay so, as long
as they contribute toward the cost of their service. These EAS com-
munities will have the opportunity to enhance their service with
more frequency or larger equipment as long as they increase their
contribution to the service, and communities closest to jet service
would be eligible for surface transportation only at a 5050 match
with the Federal Government.
Communities more than 210 miles from the largest hub, large or
medium hub, or those who are not accessible to a large or medium
hub, would be eligible for only a 10 percent match. All other com-
munities would be eligible for a 25 percent match.
Small communities that are not currently in the EAS program
would have the opportunity to seek financial assistance to facilitate
their transportation needs as long as they make a 25 percent
match, and we are pulling from part of the Small Community Air
Service Development Pilot Program in that initiative, but we think
these changes will require communities and States to rethink care-
14
fully their air transportation needs as well as the most effective

ways of meeting those needs.
Doing so in some cases will require them to make very tough
choices, and we certainly acknowledge that, but we believe that
under the new program, more participation at the State level and
the community level will more accurately assess the services
throughout the State in conjunction with other transportation ini-
tiatives to ensure a coordinated, effective approach to addressing
the States transportation requirements. We think these reforms
will better serve small communities, provide them with greater
participation, flexibility, and control in tailoring their services.
In closing, Mr. Chairman, I do want to reaffirm Secretary Mi-
netas and the Administrations commitment to service to small
communities. I will be happy to take any questions.
[The prepared statement of Ms. Van de Water follows:]
PREPARED STATEMENT OF HON. READ C. VAN DE WATER, ASSISTANT SECRETARY FOR

AVIATION AND INTERNATIONAL AFFAIRS, DEPARTMENT OF TRANSPORTATION
Good morning Mr. Chairman and members of the Committee. I am pleased to be
here today to discuss more fully the Administrations Flight100 reauthorization
proposal for small community transportation service. My experience involving what
is now the Essential Air Service Program has reinforced for me the absolute need
to reform how the government supports small community transportation. Without
fundamental changes to the way in which the Federal Government addresses these
transportation issues, communities will have little, if any, control over the service
that is providedthe service in many cases may only be partially responsive to the
community needs. Moreover, there is no doubt that it will be increasingly more ex-
pensive for the government to support those services. Even before September 11,
which affected air service throughout the country, including smaller communities,
the costs under the EAS program had grown substantially, but use of the services
was generally poor. Since September 11, we have received 44 notices by carriers to
terminate the last service at a community, most of them triggering first-time EAS
subsidy.
In Flight100, the Administration has proposed a comprehensive new program for
small community transportation service that changes both the dynamics and the
participants in the process. The key substantive reforms in the program go to the
heart of what has been recognized as a significant omission in how we address small
community transportationparticipation by the communities involved.
Under our proposal, communities will:
Participate directly in developing a plan for responding to their trans-
portation needs. Throughout the history of the Essential Air Service program,
the Federal Government has determined what service the community would re-
ceive. Under our proposed reforms for small community transportation service,
communities will have a leadership role in designing the transportation service
that will best meet their individual communitys needs. Communities them-
selves are in the best position to know their needs and their ability to support
the services to meet those needs. By participating in the design of the services
provided, the community and the government can help ensure more effective de-
cisions on how best to address the communitys needs. Our experience with the
Small Community Air Service Development Pilot Program has confirmed the
strong desire of communities to be active participants in this process. The GAO
report on small community service also emphasized that service initiatives were
most successful where the communities had active participation in the solutions
and were committed to those solutions.
Have flexibility in meeting transportation needs. Traditionally, under the
EAS program there has been a one size fits all service plan. In the early
stages of the EAS program, that system actually worked well and, more often
than not, was responsive to the needs of most small communities. As a result
of the growth and evolution of air service since then, including expanded hub-
and-spoke systems, the more recent growth of low-fare carrier services, and
changes in regional air carrier services, this model is no longer a universal tem-
plate. Our proposal provides communities a broader range of options available
15
to address their air service needs, including less frequent or charter type serv-
ice, use of smaller aircraft better matched to the actual demand for service,
ground service alternatives, and regional service initiatives where several com-
munities could be served through one airport, but with larger aircraft or more
frequent flights. Again, our experience with the Pilot Program has been very
instructive. Many communities recognize that their needs have changed and
that a broader range of options may be the difference between successful service
and service that is rarely used. Greater flexibility will make it possible for com-
munities and the government to respond more effectively and efficiently with
the service that the community needs.
Participate financially in the service plan. We believe that services at
small communities will be more effective if the community is a full partner with
the government. In addition to participating in the design of the service pro-
vided, this also involves support for that servicesupport not only in ridership,
but also financially. As a stakeholder in the transportation, the community
gains greater control over how the service is provided and its potential for suc-
cess. The amount of community contribution would be determined by the degree
of isolation. Our proposal calls for a sliding scale for financial contributions to
the service with the most remote communities contributing at a lower level and
the least isolated contributing at a higher level. While this has been the most
criticized aspect of the proposal, the Pilot Program has shown that communities
are able and willing to participate financially in their transportation services.
In last years grant process, over 70 percent of the communities were prepared
to contribute at least 10 percent of the cost of the proposed initiative. Nearly
half were prepared to contribute at least 25 percent. I want to emphasize that
we recognize that there are certain circumstances under which a community
might not be required to make a financial contribution due to special geo-
graphical considerations, and we would be prepared to consider those on a case-
by-case basis.
Under this new program:
All communities that are now under the EAS program would be eligible for fi-
nancial assistance for their transportation services, provided that they con-
tribute toward the cost of the service.
Those communities will have the opportunity to enhance their service with
more frequency or larger equipment (air or surface) with an additional financial
contribution. They may also seek additional financial assistance for other com-
ponents of their air service plan, such as marketing and other promotional ini-
tiatives.
Communities close to jet service (within 100 highway miles of a large or me-
dium hub, 75 from a small hub, or 50 from a non-hub with jet service) would
be eligible for surface transportation only, splitting the cost of the service with
the Federal Government50/50.
Communities more than 210 miles from the nearest large or medium hub are
eligible for any type of air or ground service, with a contribution of at least 10
percent of the cost of the service.
All other communities are eligible for any type of air or ground service, with
a contribution of at least 25 percent of the cost of the service.
Small communities (small hubs and smaller) not encompassed by the existing
EAS program may also seek financial assistance to facilitate their transpor-
tation needs, provided that they make a financial contribution of at least 25
percent.
These changes will require communities to rethink carefully their air transpor-
tation needs, as well as the most effective ways of meeting those needs; doing so
in some cases will also require making some very tough and unpopular decisions.
I also believe that under the new program more participation at the state level will
be necessary to assess the services throughout the state in conjunction with other
transportation initiatives to ensure a coordinated, effective approach to addressing
the states transportation requirements. I am confident that the reforms proposed
by the Administration will better serve small communities, providing them with
greater participation, flexibility, and control in tailoring service to their individual
needs, and will more effectively direct Federal funds to where they are needed most.
In closing, Mr. Chairman, I want to reaffirm the Administrations commitment to
small community transportation. With this proposal, the Administration has taken
a necessary and important step to develop a more responsive and efficient system
of transportation for smaller communities. We look forward to working with you and
16
members of this committee toward accomplishing these objectives. Thank you again
for inviting me today to this hearing. This concludes my prepared statement. I will
be happy to answer any of your questions.
The CHAIRMAN. Thank you. Dr. Dillingham, before we proceed to

you, I note Senator Stevens is here and he has a very busy sched-
ule. I wonder if Senator Stevens has any comments he would like
to make before we move to Dr. Dillingham.
Senator STEVENS. Thank you very much, Mr. Chairman. I am on
my way to a conference here in a minute, and I am taking the time
to read Ms. Blakeys statement and Ms. Van de Waters while I am
listening to Dr. Dillingham, so I will be here a few minutes. Thank
you for your courtesy. Thank you very much.
The CHAIRMAN. Thank you. Dr. Dillingham, welcome back.
STATEMENT OF GERALD L. DILLINGHAM, DIRECTOR, CIVIL
AVIATION ISSUES, GENERAL ACCOUNTING OFFICE
Dr. DILLINGHAM. Thank you, Mr. Chairman.
As we all know, the circumstances for aviation have changed dra-
matically since AIR21 was enacted. The downturn in the Nations
economy, the terrorist attacks of 9/11, the war in Iraq, and more
recently the SARS health crisis have all taken a toll on aviation.
We think that the current slowdown in the economy and in the
aviation industry has created a window of opportunity to prepare
for the systems inevitable rebound and projected growth without
the pressures of congestion and delay.
There are also some challenges that need to be addressed in
order to take advantage of this window of opportunity. My testi-
mony this morning will identify some of the key challenges that re-
authorization could address to enhance the capacity, efficiency, and
safety of the national air space system, as well as some manage-
ment issues at FAA.
Chief among the challenges associated with increasing system ca-
pacity is ensuring the continued availability of funds for airport
capital development. Over the last 5 years, funds for capital
projects have increased, in part due to the increase in the Federal
funding available through the AIP program.
The future availability of AIP funds for airport development may
be affected by the continued use of large amounts of funds for secu-
rity projects. As several have mentioned this morning, last year
there was an 800 percent increase in the use of AIP funds for secu-
rity projects. As the Administrator said, FAA expects to use an-
other half billion dollars of AIP funds for security again this year.
Our work has shown that there was a direct effect on the avail-
ability of funding for capital development as a result of the use of
AIP funds for security. The effect for this year should be looked at
very carefully.
Runway development is also central to the challenge of increas-
ing system capacity. The consensus is that building runways is one
of the most effective ways to increase capacity. Many stakeholders
believe that if the environmental review process is streamlined, it
will ease the 10- to 14-year timeframe for building a runway. In
our work, we also found that reaching agreement with community
groups about quality-of-life issues such as noise could be just as dif-
ficult and time-consuming as the environmental review process.
17
This finding suggests that initiatives aimed at addressing other

community concerns are at least as important as the environ-
mental review process.
Turning to the challenge related to the efficiency of the National
Airspace System, many of the efforts to improve the system effi-
ciency are focused on modernizing the air traffic control system,
and over the years, Congress and the Administration have taken
several significant actions to address the chronic problems associ-
ated with the modernization program.
In 1995, Congress granted FAA unique and unprecedented acqui-
sition in human capital flexibility, and although many key air traf-
fic control projects continue to experience cost schedule and per-
formance problems, our work has shown that these flexibilities
have contributed to some improvement in FAAs ability to manage
the modernization program and its ability to implement some sys-
tems.
We have also found that in both of these areas, FAA has not yet
fully implemented the flexibilities. Elements not fully implemented
include processes for evaluating the results of the reforms, and for
using that information to modify or change the reform. In 2000, a
three-part structure to improve the oversight, management, and
operation of the air traffic control system was enacted.
One of the three elements, the oversight element, which is the
Air Traffic Services Subcommittee, has been implemented. It has
emphasized performance management, accountability, and the de-
velopment of a more business-like structure to the management of
the air traffic control system, but neither the key management ele-
ment, the chief operating officer, nor the key operations element
a performance-based organizationhave been implemented.
Not surprisingly, the new structure is not yet functioning as it
was intended. Completing the implementation of these reform ef-
forts is critical to enhancing the efficiency of modernizing and oper-
ating the air traffic control system.
Turning now to the safety challenge, our work shows that safety
is still paramount at FAA. Safer Skies and the Air Traffic Over-
sight System, or ATOS, are the principal safety initiatives under-
way at FAA. In both cases, we identified some problems in the
early stages of these initiatives. However, they both show promise
for enhancing safety. Again, complete and full implementation of
the initiatives needs to occur, along with the evaluation of the out-
comes, which can then be used to modify and strengthen the pro-
gram.
We agree with the Administrator about the importance of FAA
and TSA maintaining close coordination. Because of the often vital
link between aviation safety and security, we believe it should be
viewed as a new challenge in the aviation safety area.
Turning to our last key challenge of FAAs business operations,
with declining resources and increasing demands, it is especially
important that FAA seek to improve its business operations by con-
trolling or reducing costs. We think that strong internal controls
are essential to ensure that programs run efficiently and to prevent
potential fraud, waste, and abuse.
In our work, we found that FAA faces some significant chal-
lenges in the area of internal controls. For example, we found in-
18
stances in which internal control weaknesses in FAAs purchase

card program contributed to almost $5.5 million of improper pur-
chases by employees and over a half million dollars in purchases
that were considered wasteful or questionable in a 1-year period.
To its credit, FAA immediately implemented program reforms to
address our findings. It is important that FAA stay the course in
this area and ensure full implementation of these reforms.
The DOT Inspector General reported similar concerns with FAAs
internal controls for accounting and for distributing labor costs for
air traffic controllers. Fixing this internal control weakness is par-
ticularly important, because FAA needs accurate data for workforce
planning. Accurate workforce data is especially important as FAA
plans for the expected attrition of thousands of air traffic control-
lers in the next few years.
Thank you, Mr. Chairman, for inviting GAO to be here this
morning. Our office stands ready to assist this committee in any
way we can as it proceeds with its very important reauthorization.
[The prepared statement of Dr. Dillingham follows:]
PREPARED STATEMENT OF GERALD L. DILLINGHAM, DIRECTOR,
CIVIL AVIATION ISSUES, U.S. GENERAL ACCOUNTING OFFICE
Mr. Chairman and members of the Committee:
We are here today to discuss the reauthorization of Federal aviation programs
and issues relevant to ensuring the safe and efficient operation of the National Air-
space System. 1 Much has changed since the Wendell H. Ford Aviation Investment
and Reform Act for the 21st Century (AIR21) reauthorized the Federal Aviation
Administrations (FAA) programs 3 years ago. At that time, as you know, air traffic
was increasing, and concerns about congestion and flight delays were paramount.
Since then, the downturn in the nations economy, the terrorist attacks of Sep-
tember 11, 2001, and, most recently, the war in Iraq have taken a heavy toll on
aviation. Flights that were once filled are now being canceled for lack of business,
and major air carriers are in serious financial difficulty. Furthermore, as the Fed-
eral budget deficit has increased, competition for federal resources has intensified.
Analysts nonetheless expect the demand for air travel to rebound, and the Nations
aviation system must be ready to accommodate the projected growth safely and se-
curely. The current slowdown in the economy and in the aviation industry has cre-
ated a window of opportunity to prepare for this growth without the pressures of
congestion and flight delays. My statement today focuses on the challenges that the
Congress, the Administration, and FAA face in increasing aviation capacity, effi-
ciency, and safety, and maintaining controls over costs. My statement is based pri-
marily on our published reports, as well as our ongoing work for this committee dis-
cussed in the scope and methodology section at the end of the statement.
In summary:
Increasing capacity and service in the National Airspace System poses several
challenges for the Congress and the Administration during this reauthorization
process. Chief among them is deciding how much of airports planned capital
development should be funded to increase capacity and service, as well as im-
prove the efficiency and safety of the National Airspace System. Funds for air-
ports capital development have increased over the last 5 years, in part because
of increases in the Federal grant funding provided to airports under the Airport
Improvement Program. Current funding levels are sufficient to cover much of
the estimated cost of planned capital development. However, future funding lev-
els may be affected by changes in the allocation of Airport Improvement Pro-
gram grant funds and by projected decreases in the Airport and Airway Trust
Fund, which supports the Airport Improvement Program and other FAA ac-
counts. Other challenges include building runways expeditiously to increase ca-
pacity and providing air service to small communities. Runway development
now takes 10 to 14 years, primarily because of time-consuming environmental
reviews and community concerns. Two Federal programs, the Essential Air
Service and the Small Community Air Service Development Pilot programs,
help bring air service to small communities, but the costs of this service are in-
creasing while passenger ticket revenues are declining. The Administration is
19
proposing an approach to streamline the environmental reviews required for
runway development, and intermodal alternatives, such as rail or bus service,
could provide access to the national air transportation system for some small
communities.
Efforts to improve the efficiency of the National Airspace System by modern-
izing its principal component, the air traffic control system, face ongoing chal-
lenges despite actions taken by the Congress and the Administration to elimi-
nate the cost overruns, schedule delays, and performance shortfalls that have
plagued FAAs air traffic modernization program and led us to designate this
program as high risk. These actions include granting FAA acquisition and
human capital flexibilities in 1996 and creating a new, three-component struc-
ture to improve the oversight, management, and operation of the air traffic con-
trol system in 2000. Our work has shown that FAA has responded to these ac-
tions to varying degrees, but more remains to be done. Overall, FAA is improv-
ing its management of the air traffic modernization program and has imple-
mented some systems, but key projects continue to experience cost, schedule,
and performance problems. Additionally, FAA has used its acquisition flexibili-
ties to establish an acquisition management system and its human capital flexi-
bilities to fully or partially implement human capital reform initiatives. The ac-
quisition management system has provided FAA with a structured management
approach for selecting and controlling its investments, and the human capital
reform initiatives are affording opportunities for FAA to manage its workforce
more efficiently. However, in implementing both of these reforms, FAA has not
yet incorporated important processes or elements for evaluating the results of
its efforts, modifying these efforts as necessary, and holding its managers ac-
countable. Finally, one of the three components of the new structure for improv-
ing the performance of the air traffic control system has been implemented. The
oversight component, the Air Traffic Services Subcommittee, has been meeting
since January 2001 and emphasizing performance management, but without the
management and operating components, the new structure is not yet func-
tioning as intended. Completing the implementation of, and continuing to im-
prove, these efforts will be important to enhancing the efficiency of the air traf-
fic control system.
Important steps have been taken to enhance aviation safety, but some chal-
lenges remain. Safer Skies, an initiative designed by FAA and the aviation in-
dustry to reduce the nations fatal aviation accident rate by 80 percent by 2007,
is the centerpiece of these efforts to improve aviation safety. This initiative
began in 1998, and many preventive actions are under way but have not yet
been fully implemented. Another key effort to improve aviation safety is FAAs
Air Transportation Oversight System, which was redesigned to provide more ef-
fective inspections of the Nations airline operations. In reporting on this system
in 1999, we noted that it incorporated important features to ensure that airlines
have systems to control risks and prevent accidents, but that it had encountered
startup problems with data collection and program guidance. 2 Many of these
problems were not yet fully resolved when the Department of Transportations
Inspector General reported on the inspection system last year. 3 Finally, because
of the often vital link between aviation safety and aviation security, it will be
critical for FAA to ensure that aviation safety is maintained as the Department
of Homeland Securitys Transportation Security Administration implements
new security enhancements.
With the decline in revenues to the Airport and Airway Trust Fundthe prin-
cipal source of funding for most of FAAs operations, facilities and equipment,
and grant programsit is especially important that FAA control or reduce
costs, run its programs efficiently, and detect and prevent fraudulent activities.
FAA, however, faces challenges in implementing controls over its costs. For ex-
ample, during Fiscal Year 2000, weaknesses in the internal controls over FAAs
purchase card program contributed to $5.4 million in improper purchases by
FAA employees and over $630,000 in purchases that were considered wasteful
or questionable. In addition, FAA has partially implemented a new cost ac-
counting system that enables it to track 70 percent of its air traffic services
costs; however, according to the Department of Transportations Inspector Gen-
eral, this system lacks internal controls over $3.1 billion in labor costs. The In-
spector General further noted that a portion of this system, if implemented as
designed, could provide workforce data that would be helpful in determining
how many controllers are needed and where. These data would assist FAA in
planning for the anticipated retirement of large numbers of air traffic control-
lers in the near and long term.
20
Efforts to Increase Aviation Capacity and Service Face Funding and Other
Challenges
During this reauthorization period, the Congress and the Administration face sev-
eral key challenges in attempting to increase the capacity of the National Airspace
System and expand service to small communities. These challenges include deter-
mining (1) how much airport capital development is needed, (2) how that develop-
ment will be funded, (3) how assistance for enhancing air service to small commu-
nities will be provided, and (4) how the current process for enhancing capacity, par-
ticularly the runway development process, can be expedited.
FAA and the Airport Industry Have Developed Different Estimates of Airports
Planned Capital Development Costs
FAA and the Airport Council International (ACI), an organization representing
the airport industry, have developed two different estimates of airports planned
capital development costs that are based on two different sets of projects. According
to FAAs estimate, which includes only projects that are eligible for Airport Improve-
ment Program (AIP) grants, such as runways, taxiways, and noise mitigation and
noise reduction efforts, the total cost of airport development will be about $46 bil-
lion, or over $9 billion per year, for 2001 through 2005. FAAs estimate is based on
the agencys National Plan of Integrated Airport Systems, which FAA published in
August 2002. ACIs estimate includes all of the projects in FAAs estimate, plus
other planned airport capital projects that may or may not be eligible for AIP
grants. Projects that are not eligible for AIP funding include parking garages, hang-
ars, and expansions of commercial space in terminals. ACI estimates a total cost of
almost $75 billion, or nearly $15 billion per year, for 2002 through 2006. Neither
ACIs nor FAAs estimate includes funding for the terminal modification projects
that are needed to accommodate the new explosives detection systems required to
screen checked baggage. ACI estimates that these projects will cost about $3 billion
to $5 billion over the next 5 years.
Although there is a difference of $6 billion a year between FAAs and ACIs esti-
mates of planned development costs, both estimates cover projects for every type of
airport. As table 1 indicates, the estimates are identical for all but the large-and
medium-hub airports, which are responsible for transporting about 90 percent of the
traveling public. For these airports, ACIs estimate of planned development costs is
about twice as large as FAAs. As the Congress moves forward with reauthorizing
FAAs programs, it will have to determine what level of planned capital develop-
ment is appropriate to increase the capacity, efficiency, and safety of the National
Airspace System.
Table 1: Average Annual Planned Development Costs Estimated by FAA and ACI, by Airport Type,
20012006 (Dollars in millions)
Estimated average annual costs
Airport type Number of airports
FAA ACI
Large hub 31 $4,855 $8,554

Medium hub 37 1,073 3,109
Small hub 71 675 675
Nonhub 280 807 807
Other commercial service 124 142 142
Reliever 260 526 526
General aviation 2,558 1,167 1,167
Total 3,364 $9,245 $14,980

Source: FAA and ACI.
Airports Ability to Fund Planned Capital Development Has Improved

Over the past 5 years, the ability of airportsespecially smaller airportsto fund
their capital development projects has improved, in part because AIR21 increased
both the total amount of funding for AIP grants and the proportion of AIP funding
that went to smaller airports. In 1998, we reported that large-and medium-hub air-
ports could fund about 79 percent of their planned capital development and smaller
airports could fund about 52 percent of their planned capital development if they
continued to receive funding at prior years levels. In 2003, the funding ability of
both groups of airports increased. As shown in figure 1, large-and medium-hub air-
ports could fund about 80 percent of their planned capital development, an increase
of 1 percentage point, while smaller airports could fund about 73 percent of their
21
planned capital development, an increase of 21 percentage points, assuming the con-
tinuation of prior years funding levels. 4
The primary reason why smaller airports are able to fund 73 percent of their
planned development in 2003, rather than the 52 percent we reported in 1998, is
that they have benefited significantly from the increases in AIP grants, which are
a larger source of funding for smaller airports than for larger airports. In addition,
smaller airports have received an increasing share of AIP grants because of statu-
torily required changes in the distribution of AIP grants. For example, in AIR21,
the Congress increased the funding for two grant categories that primarily or exclu-
sively benefit smaller airportsthe state apportionment fund and the small airport
fundand created general aviation entitlement grants, which also benefit smaller
airports. The Senates and the Administrations reauthorization proposals continue
to support increases in the amount of AIP grant funding awarded to smaller air-
ports. In spite of the progress that has been made, over 25 percent of planned cap-
ital development is not funded. The Congress needs to be mindful of this situation
as it considers reauthorization issues.
Changes in the Use of AIP Grants and Additional Decreases in Trust Fund Revenue
Could Affect Airports Future Funding Ability
The use of AIP grants to fund new airport security requirements and additional
decreases in the Airport and Airway Trust Funds 5 revenues could affect the future
ability of airports to fund their planned capital development. In recent fiscal years,
airports obtained most of their funding for planned capital development from bonds,
AIP grants, and passenger facility charges. 6 Because the Trust Fund is the source
of funding for AIP grants, its financial condition is important to the ability of air-
410gao1.eps
22
ports to fund capital development, and decreases in its revenues could reduce the
amount of funding for airport planned capital development. Reductions in AIP grant
funds would have the greatest effect on smaller airports, which derive most of their
planned capital development funding from AIP grants, whereas large-and medium-
hub airports derive most of their funding from bonds.
Continued Use of AIP Grant Funds for Security Projects Would Reduce Funding for
Capacity Projects
According to FAA officials, FAA plans to allocate the same amount of AIP grant
funds for new security projects at airports in Fiscal Year 2003 as it allocated in Fis-
cal Year 2002$561 million. As we reported in October 2002, 7 the use of AIP
grants for security projects reduced the funding available for other airport develop-
ment projects, such as projects to bring airports up to FAAs design standards and
reconstruction projects, and caused FAA to defer three letter-of-intent payments to-
taling $28 million to three airports until Fiscal Year 2003 or later. 8 Among the key
reauthorization issues facing the Congress are how the funding needs for capacity
and security projects will be balanced and how the new security requirements, in-
cluding the terminal modification projects that are expected to cost $3 billion to $5
billion, will be funded.
Additional Declines in Airport and Airway Trust Fund Revenue Could Also Affect
Amount of AIP Grant Funds Available for Future Capital Development
The future ability of airports to fund planned capital development may be affected
by uncertainties surrounding the condition of the Trust Fund. As you know, the
Trust Fund is the source of funding not only for AIP grants but also for other FAA
accounts, including facilities and equipment; research, engineering, and develop-
ment; and most operations. Revenues to the Trust Fund come from several types
of taxes, including passenger ticket and fuel taxes. Although projections made in
November 2002 indicate that the Trust Fund will be able to meet its traditional ob-
ligations over the next 10 years, the financial outlook for the next 5 to 8 years is
uncertain, in part, because passenger traffic has decreased with the slowdown in the
economy. Current estimates indicate that between Fiscal Year 2003 and Fiscal Year
2007, the Trust Funds 2002 uncommitted balance of about $4.8 billion will decline
by about $4 billion, leaving a balance of less than a billion dollars. In addition, if
revenues fall short of current projections, the Trust Funds uncommitted balance
may be zero. Under this scenario, AIP grants and other FAA accounts supported by
the Trust Fund could potentially receive less funding, and the Congress and the Ad-
ministration would have to decide how to offset the potential decreases.
As figure 2 shows, from 1999 through 2002, revenues to the Trust Fund have de-
clined, while expenditures from the fund have increased. Revenues fell from about
$11 billion in 1999 to almost $10 billion in 2002, a decrease of almost 10 percent.
During the same period, expenditures increased from about $8 billion to about $12
billion, an increase of about 47 percent. As a result, the uncommitted balance (sur-
plus) has fallen by nearly 35 percent, from $7 billion in 1999 to almost $5 billion
in 2002.
The major reason for the decline in Trust Fund revenues was a drop in passenger
ticket tax revenues, which fell by nearly $1.2 billion from 1999 to 2002. The increase
in Trust Fund expenditures from 1999 through 2002, amounting to almost $4 bil-
lion, can be attributed primarily to increases in funding for FAA operations and AIP
410gao2.eps
23
grants, which accounted for about 47 percent and about 34 percent of the total in-
crease, respectively.
In addition, the Administration is proposing actions that would further reduce the
Trust Fund balance over the next several years. Specifically, the Presidents Fiscal
Year 2004 budget request would increase the percentage of FAA operations funded
by the Trust Fund from 75 percent 9 to 79 percent. The decrease in Trust Fund reve-
nues and increase in Trust Fund expenditures presents an issue that the Congress
may want to address as it moves forward with the reauthorization process.
Resolving Challenges to Runway Development Remains an Important Issue
While there is a general consensus that building runways is one of the most effec-
tive ways to increase capacity in the National Airspace System, resolving the chal-
lenges associated with planning and building runways is an important issue that
is directly related to enhancing capacity. In December 2002, FAA published the
most recent version of its Operational Evolution Plan, a 10-year plan to increase the
capacity and efficiency of the National Airspace System, primarily by building run-
ways. 10 Figure 3 illustrates how capacity will be increased at one airport through
runway construction.
410gao3.eps
24
If successfully carried out, FAAs Operational Evolution Plan would substantially
increase capacity and improve efficiency. However, FAA faces several challenges in
implementing the plan. First, the success of the plan depends on adequate funding
and on the consensus of FAAs aviation industry partners. Yet according to the most
recent version of the plan, the timing and implementation of some activities may
be in jeopardy because of the current economic situation and the uncertain viability
of some industry participants. For example, the plan calls for the airline industry
to invest $11 billion in new equipment for aircraft. FAA is currently reviewing the
ability of the airlines to make this investment. Second, as noted, the plan relies
heavily on runway development to increase capacity, but the most recent version of
the plan reports mixed results in building new runways. While the plan indicates
that one new runway will be built during the next 10 years, it points out that an-
other runway has been canceled and the construction of six additional runways has
been delayed because of local situations.
In January 2003, we reported that airports spent about 10 years planning and
building recently completed runways and expect to spend about 14 years on run-
ways that are not yet completed. 11 We also reported that several external factors
affect how much time is spent planning and building runways, and several airports
with unfinished runway projects identified significant challenges that had delayed
the completion of their projects. While many airports believed that completing the
environmental review phase was a significant challenge and is an issue that war-
rants immediate attention, airports also faced obstacles that some said were as on-
erous as the environmental review phase. They identified significant challenges in
reaching agreement with community interest groups during the planning phase and
in mitigating the potential impact of aircraft noise on the surrounding community.
Although there may be no single solution to resolving all of the issues involved in
planning and building runways, the Federal Government and airport authorities are
taking some action. For example, the Senates and the Administrations reauthoriza-
tion proposals call for streamlining the environmental review of transportation in-
frastructure projects.
Recognizing that building new runways is not always a practicable way to in-
crease capacity at some airports, we identified three alternatives to building run-
ways in our December 2001 report: 12
Find ways to manage and distribute demand within the systems existing capac-
ity at busy airports such as LaGuardia, by, for example, limiting the number
of takeoffs and landings during peak periods or limiting the ability of general
aviation aircraft to use especially congested airports (under current law, all air-
craft have equal access to even the largest airports). Airports are restricted in
using pricing to reflect the scarcity and congestion of airspace.
Add capacity by using nearby airports that have available capacity.
Examine other modes of intercity travel, such as high-speed rail, where metro-
politan areas are relatively close, to form an integrated, intermodal transpor-
tation network.
Accordingly, we recommended that the Department of Transportation (DOT) begin
a more extensive evaluation of initiatives, including intermodal solutions and a dia-
logue with transportation stakeholders, as a basis for developing a comprehensive
blueprint for addressing the nations long-term transportation needs. DOT has rec-
ognized the need for more and better long-range planning on the potential use of
such measures and agreed with our recommendation. The Departments evaluation
efforts are in the beginning stages. The current hiatus in air traffic growth creates
an opportunity for the development of long-term transportation plans.
Federal Programs to Help Small Communities Improve Air Service Face Budgetary
Pressures and Questions about Their Effectiveness
While the need for greater capacity is a vital issue for some large-and medium-
hub airports, the primary issue at other airports that serve small communities is
to obtain or retain commercial air service. The reauthorization process provides an
opportunity for the Congress to clarify the Federal strategy for helping small com-
munities acquire the commercial air service they desire. Currently, the challenges
that small communities have long faced in obtaining or retaining commercial air
service are increasing as many U.S. airlines try to stem unprecedented financial
losses through numerous cost-cutting measures, including reducing or eliminating
service in some markets. Small communities feel such losses disproportionately be-
cause they may have service from only one or two airlines. For them, reductions can
mean no air service at all.
The Essential Air Service (EAS) program, authorized under the Airline Deregula-
tion Act of 1978, guarantees that small communities served before deregulation will
25
continue to receive a certain level of scheduled air service. Its costs have more than
tripled since Fiscal Year 1995, and indications are that without changes to the pro-
gram, the demand for subsidies will soon exceed the programs $113 million appro-
priation for Fiscal Year 2003. At the same time, aggregate passenger levels at EAS-
subsidized airports continue to fall. Often fewer than 10 percent of a communitys
potential passengers use the subsidized local service; the rest choose to drive to
their destination or drive to a larger airport that offers lower fares or more frequent
service to more destinations. In 2000, the median number of passengers on each
EAS-subsidized flight was three. The Administrations budget proposal for Fiscal
Year 2004 would substantially reduce the federal subsidy for small community air
service and require communities that wish to retain the service to help subsidize
it. Specifically, the budget proposal would reduce federal EAS funding from $133
million in 2003 to $50 million in 2004, alter the eligibility criteria for funding, and
require nonfederal matching funds. Consistent with its budget proposal, the Admin-
istrations reauthorization proposal would restructure the EAS program to direct its
resources to the small communities with the greatest need to maintain access to na-
tional air transportation service. The Senate bill proposes to reauthorize funding for
the program at current levels.
The Small Community Air Service Development Pilot Program, authorized as part
of AIR21, provides grants to communities to enhance local air service. In Fiscal
Year 2002, 180 communities requested over $142 million in air service development
grants, and $20 million was appropriated. In March 2003, we reported that the pro-
gram funded some innovative approaches. 13 For example, Mobile, Alabama, re-
ceived about $450,000 to provide ground-handling services to an airline, and Caspar,
Wyoming, received $500,000 to purchase and lease back an aircraft to an airline to
ensure service to the community. The program also funded the same types of
projects that many small communities have undertaken in recent years, such as
evaluations of marketing activities and the use of financial incentives to encourage
airlines to either start or enhance service. According to our analysis of similar ap-
proaches used by about 100 small communities, financial incentives offered the most
promise for attracting new or additional service. However, the additional service
typically ended with the incentives. The sustainability of such improvements in air
service over the longer term appeared to depend on the communitys size and ability
to demonstrate a commitment to that air service, either by providing a profitable
passenger base or through direct financial assistance. As you know, the Administra-
tions Fiscal Year 2004 budget proposal would eliminate the funding for this pilot
program. It is too soon to determine how effective the various types of initiatives
funded through this program might prove to be. Other options for making the na-
tional air transportation system more accessible to small communities might include
intermodal initiatives such as those we proposed as alternatives to runway develop-
ment.
Efforts to Improve the Efficiency of the Air Traffic Control System Face
Ongoing Challenges
Improving the efficiency of the air traffic control system will be important to ac-
commodate the expected return to pre-September 11 air traffic levels. Efforts to
achieve this improvement pose continuing challenges, as FAA attempts to put acqui-
sition management and human capital reforms in place and establish an effective
oversight and organizational structure to help ensure that resources are spent cost-
effectively and improvements are realized.
FAAs Air Traffic Modernization Remains High Risk
To increase the safety, capacity, and efficiency of the National Airspace System,
FAA undertook a major effort in 1981 to modernize and replace aging air traffic con-
trol equipment. This effort, which includes major projects in such areas as commu-
nications, surveillance, navigation, and weather, has been plagued by cost overruns,
schedule delays, and performance shortfalls. As a result, we designated FAAs air
traffic modernization program as high risk in 1995, and we continue to designate
it as such. 14 Figure 4 combines our and the DOT Inspector Generals analysis of
FAAs progress in meeting cost and schedule goals for selected air traffic control
projectsthe Standard Terminal Automation Replacement System (STARS), Wide
Area Augmentation System (WAAS), Next-Generation Air/Ground Communication
(NEXCOM), free flight, Local Area Augmentation System (LAAS), and Integrated
Terminal Weather System (ITWS).
26
FAA is making progress in managing the air traffic control modernization effort
and has implemented some key projects. For example, the agency has replaced the
automated color display equipment used by air traffic controllers to control traffic
in some facilities (Display System Replacement); installed the initial phase of the
computer that receives, processes, and tracks aircraft movement throughout the air-
space system (HOST computer); and implemented some free flight technologies that
are expected to allow for more efficient use of the system by improving operations
in various segments of flight. Figure 5 shows an FAA representative using the Dis-
play System Replacement to monitor and handle air traffic.
410gao4.eps
27
However, other key projects continue to experience cost, schedule, and perform-
ance problems. The Inspector General has reported that the costs of five acquisitions
have grown by $3 billionthe equivalent of 1 years budget for the modernization
programand the delay in completing these acquisitions has ranged from 3 to 5
years. 15 Problems in implementing the Standard Terminal Automation Replace-
ment System are indicative of the problems that have plagued the modernization
program. Since September 1996, FAA has been developing the STARS project to re-
place the outdated computer equipment that air traffic controllers currently use in
some facilities to control air traffic within 5 to 50 nautical miles of an airport.
The current program presently bears little resemblance to the program envisioned
in 1996. Initially FAA anticipated very little software development, planned to in-
stall STARS in 172 facilities at a cost of $940 million, and expected implementation
to begin in 1998 and end in 2005. In 1999, FAA modified its acquisition approach
(from off-the-shelf software to a combination of customized and off-the-shelf soft-
ware) and increased to 188 the number of facilities scheduled to receive STARS.
Then the agency concluded that it did not have adequate funding to deploy STARS
to 188 facilities, and in March 2002, it received approval to deploy STARS at 74
facilities that had frequent equipment failures, were new, or had the digital radar
needed to operate STARS.
FAA does not yet know to what extent its estimate of STARSs remaining develop-
ment costs is reliable because, as we reported in January 2003, FAA lacks accurate,
valid, current data on the STARS programs remaining costs and progress. 16 With-
out such data, FAA is limited in its ability to effectively oversee the contractors per-
formance and reliably estimate future costs. Although FAA has adopted clear pro-
curement management policies and procedures, it did not consistently apply this
guidance in managing the STARS contract. For example, the development cost esti-
mate is based on the contractors projections, which FAA had not yet independently
analyzed as its guidance directs. We made several recommendations to improve the
management of STARS and subsequent terminal modernization programs and to
410gao5.eps
28
provide the Congress with more reliable information for oversight. FAA agreed with
our recommendations and is implementing them.
Acquisition Management System Is in Place, but Weaknesses Limit FAAs Ability to
Manage Its Investments Effectively
As part of its procurement reforms, FAA introduced an acquisition management
system in 1996 to reduce the time and cost to deploy new products and services.
In 1999, we reported that this system provided a structured management approach
for selecting and controlling investments, but still had weaknesses, such as incom-
plete data on projects costs, schedule, benefits, performance, and risks, that limited
FAAs ability to manage its investments effectively. We made several recommenda-
tions to address these weaknesses and FAA has made changes to better manage its
investments. We have since found that FAA is overseeing investment risk and cap-
turing key information from the investment selection process in a management in-
formation system and is also developing guidance for validating costs, benefits, and
risks. However, FAA is not yet incorporating actual costs from related system devel-
opment efforts in its processes for estimating the costs of new projects. Moreover,
FAA has not yet implemented processes for evaluating projects after implementa-
tion in order to identify lessons learned and improve the investment management
process. These weaknesses have impeded FAAs ability to manage its investments
effectively and make sound decisions about continuing, modifying, or canceling
projects. Because its acquisition reform effort is not complete, major projects con-
tinue to face challenges that could affect their costs, schedule, and performance.
Human Capital Reform Initiatives Do Not Incorporate Elements Important for Effec-
tive Management
In response to claims by FAA that burdensome government-wide human capital
rules impeded its ability to hire, train, and deploy personnel, the Congress exempted
FAA from many Federal laws 17 governing human capital, and the agency began im-
plementing sweeping human capital reforms in 1996. 18 These reforms addressed
three broad areas. (1) compensation and performance management, (2) workforce
management, and (3) labor and employee relations. Figure 6 summarizes our anal-
ysis of FAAs progress in implementing initiatives in each of these areas.
While FAA has fully or partially implemented the initiatives in each of its three
broad reform areas, it has not fully incorporated elements that are important to ef-
fective human capital management into its overall reform effort. These elements in-
clude data collection and analysis, performance goals and measures, and links be-
tween reform goals and program goals. Furthermore, as we reported in February
2003, FAA has not developed specific steps and time frames for building these miss-
ing elements into its human capital management and for using these elements to
evaluate the effects of its personnel reform initiatives, make strategic improve-
ments, and hold the agencys leadership accountable.
New Structure for Improving the Performance of the Air Traffic Control System Has
Not Been Fully Implemented
In 2000, AIR21 and an executive order established a new structure to accelerate
the modernization and improve the performance of the air traffic control system.
This structure was to consist of (1) a five- member board, called the Air Traffic Serv-
410gao6.eps
29
ices Subcommittee (Subcommittee), to oversee the air traffic control system, (2) a
chief operating officer to manage the air traffic control system, and (3) a new per-
formance-based organization, to be known as the Air Traffic Organization, to oper-
ate the air traffic control system. Under the act, the Subcommittee provides over-
sight by, among other things, reviewing and approving strategic plans, large con-
tracts, and budget requests for the air traffic control system.
The Subcommittee has been meeting since January 2001, but a chief operating
officer has not yet been appointed, and FAA is waiting for an appointment before
putting the new air traffic organization in place. To date, the Subcommittee has fo-
cused on bringing performance management, accountability, and a more business-
like structure to the air traffic control system, and it has taken some specific ac-
tions, including reviewing and approving performance metrics, a budget, and three
large procurements that FAA initiated. However, without a chief operating officer
or a performance-based organization, the new structure is not functioning as in-
tended.
FAA and other stakeholders have suggested reasons for the difficulties in imple-
menting the new structure and have proposed changes to AIR21 that they believe
would address these reasons. For example, they have noted that the Subcommittees
authority to approve the budget request for the air traffic control system challenges
the Administrations prerogative to submit a budget request reflecting its priorities,
and they have cited uncertainties in the responsibilities and reporting relationships
of the chief operating officer, the FAA Administrator, and the Subcommittee that,
they say, have made it difficult to hire a chief operating officer. To address these
issues, the Administrations reauthorization proposal would (1) eliminate the Sub-
committees approval authority, making the Subcommittee an advisory body, and (2)
designate the FAA Administrator as the chair of the Subcommittee, thereby
strengthening the Administrators authority over, and accountability for the per-
formance of, the chief operating officer. While these changes would eliminate the
challenge that the Subcommittees approval authority poses to the Administrations
prerogatives; would clarify the lines of authority between the chief operating officer,
the FAA Administrator, and the Subcommittee; and could make it easier to hire a
chief operating officer, they would also limit the power of the Subcommittee. The
Senates reauthorization proposal would also designate the FAA Administrator as
the chair of the Subcommittee, but it would retain the Subcommittees approval au-
thority. The merits of these and other proposed changes depend, in large part, on
the extent to which approval authority is viewed as necessary or desirable to bring
about improvements in the performance of the air traffic control system.
FAA Is Implementing Safety Initiatives and Faces New Challenges in
Ensuring That Security Enhancements Maintain Aircraft Safety
Safety has always been and continues to be FAAs highest priority. FAA has taken
a number of important steps to improve aviation safety; however, its planning and
implementation could sometimes be more effective. In addition, with the transfer of
most aviation security responsibilities to the Transportation Security Administra-
tion (TSA), FAA faces the challenge of maintaining close coordination with TSA to
ensure that aircraft safety is maintained as TSA implements new security enhance-
ments.
FAA and Industry Have Taken Actions to Reduce the Fatal Accident Rate
Reducing fatal aviation accidents is key to improving aviation safety. FAAs cen-
terpiece for reaching this goal is Safer Skies, an initiative that dates back to 1998,
when FAA and aviation industry representatives worked together to identify the
major causes of fatal accidents and to design and implement actions to prevent fu-
ture accidents. Safer Skies is intended to reduce the fatal accident rate for commer-
cial aviation by 80 percent and to reduce the number of fatal accidents for general
aviation to 350 a year by 2007. 19 Because many preventive actions have not yet
been fully implemented, it may be too early to assess their effectiveness. Achieving
the initiatives goals will require FAA to systematically implement preventive ac-
tions, such as requiring additional safety inspections of aircraft, and to maintain
good data to monitor the progress of these actions and evaluate their effectiveness.
As of February 2003, 44 preventive actions had been undertakenof which 16 are
completed and 28 are under way, according to FAA.
FAAs New Safety Inspection System Offers Promise, But Problems Still Need to Be
Addressed
Improving the effectiveness of FAAs inspections of airline operations is key to im-
proving aviation safety. The FAA Administrator has noted that perhaps the greatest
support the agency can provide to the industry is a robust safety oversight role that
will not waver in difficult times. FAAs new inspection program, the Air Transpor-
30
tation Oversight System, is central to this oversight role. This program, which was
implemented in 1998, aims to ensure not only that airlines comply with FAAs safe-
ty requirements but also that they have operating systems to control risks and pre-
vent accidents. Figure 7 shows an FAA inspector inspecting an aircraft for compli-
ance with FAAs safety requirements.
We reported in 1999 that FAA had not completed many critical steps, such as de-
veloping guidance for inspectors and creating databases to use in prioritizing inspec-
tion resources, before implementing the new inspection system in 1998. 20 As a re-
sult, the agencys ability to conduct effective inspections remains limited. FAA has
begun to address some of the problems that we identified with the guidance and
the databases. However, according to a 2002 review by the DOT Inspector General,
many of the problems that we identified persist, and the programs implementation
remains inconsistent because FAA has not established strong oversight and account-
ability procedures. 21 This situation limits FAAs ability to conduct more systematic,
structured inspections; analyze the resulting data to identify safety trends; and tar-
get its resources to the greatest aviation safety risks.
Aviation Safety and Security Require Close Coordination Between FAA and TSA
Some key efforts under way to improve aviation security require interagency co-
ordination between FAA and TSA because they could also affect aircraft safety.
While TSA is responsible for most issues related to aviation security, FAA retains
responsibility for those related to aviation safety, including approving the initial air-
craft design, structural modifications, and procedures for emergency evacuation and
the transportation of hazardous cargo. 22 For example, strengthening cockpit doors
to increase cockpit security during flights was one of the governments earliest re-
sponses to the September 11 terrorist attacks. Because the modifications could in-
crease the weight of the doors and change the way they are attached to the aircraft,
FAA has been certifying these modifications to ensure that they will not cause de-
compression during flight or affect the aircrafts structural integrity. In addition,
new security procedures require that the cockpit door remain locked during flight
and that access to the cockpit be restricted to the flight crew. As a result, senior
flight attendants will no longer carry keys to the cockpit, and FAA is approving
changes to the procedures for rescuing the flight crew in an emergency.
410gao7.eps
31
FAA is also responsible for the safe transport of dangerous materials onboard air-
craft. Dangerous goods are chemical (including infectious) substances (or anything
containing such substances) that pose a threat to public safety or the environment
during transportation. When these goods are properly packaged, labeled, and stowed
onboard, they can be transported safely, but when they are not, they can pose sig-
nificant threats to people and property. TSA is responsible for screening all pas-
sengers and property, including cargo, that will be carried aboard an aircraft. If,
during the screening of passengers or baggage, TSA discovers dangerous goods that
are not properly packaged or labeled, TSA will need to coordinate and share infor-
mation with FAA, which is responsible for enforcing any regulatory violations.
In addition, aircraft crashes could fall under the jurisdiction of either FAA or
TSA, depending on whether they were the results of accidents (FAA) or deliberate
acts (TSA). It will be important for the two agencies to work together closely during
the initial stages of crash investigations. To facilitate coordination on these and
other security issues that affect aviation safety, TSA and FAA signed a memo-
randum of agreement on February 28, 2003. In addition, on March 4, 2003, the Sec-
retary of Transportation agreed to assign a senior official within the Office of the
Secretary to serve as DOTs primary liaison to TSA. It is important that both FAA
and TSA remain committed to coordinating closely on safety and security issues and
that congressional oversight ensures that the memorandum of agreement is imple-
mented.
FAA Faces Challenges in Implementing Controls Over Its Costs
As the Administration and the Congress focus on increasing aviation capacity, ef-
ficiency, and safety, they do so in an extremely challenging fiscal environmentthe
federal budget deficit has increased and competition for federal resources has inten-
sified. Moreover, as we mentioned previously in this statement, revenues to the
aviation Trust Fund, which is the source of funding for most of FAAs operations,
facilities and equipment, and grant programs, have declined in recent years while
outlays have increased. It is, therefore, especially important that FAA control or re-
duce costs, run its programs efficiently, and detect and prevent fraudulent activities.
We and DOTs Inspector General have reported that improvements are needed in
these areas.
For example, in March 2003, we reported that weaknesses in FAAs purchase
card 23 controls resulted in instances of improper, wasteful, and questionable pur-
chases, as well as missing and stolen assets. 24 These internal control weaknesses
included inadequate segregation of duties (i.e., the cardholder requested the pur-
chase, placed the order, and picked up or received the goods without any other re-
view or approval), lax supervisory review and approval, missing purchase docu-
ments, inadequate training, and insufficient program monitoring activities, all of
which created an environment vulnerable to fraud, waste, and abuse. During Fiscal
Year 2000, these weaknesses contributed to $5.4 million in improper purchases by
FAA employees and over $630,000 in purchases that were considered wasteful or
questionable because they were missing a receipt to show what was actually pur-
chased. To reduce the likelihood of improper and wasteful purchases, we rec-
ommended a number of actions to strengthen the internal controls over FAAs pur-
chase card program, such as developing detailed procedures that specify the type
and extent of review or approval that is expected. FAA agreed with our rec-
ommendations.
In addition, DOTs Inspector General reported in January 2003 that FAA needs
to contain increases in its operating costs and improve its internal controls over
costs. 25 Over the past 6 years, FAAs operations budget, which is 73 percent per-
sonnel costs, increased by over 41 percent, from $5.3 billion in Fiscal Year 1998 to
$7.5 billion in Fiscal Year 2003. The Inspector General noted that FAA has made
extensive use of its human capital flexibilities to substantially increase salaries, but
has done little to reduce operating costs. FAA has improved its ability to track its
costs by partially implementing a new cost accounting system that the Congress di-
rected it to develop in 1996. The new system, which FAA expects to be fully oper-
ational by the end of 2003, now tracks 70 percent of the personnel, overhead, and
other costs related to air traffic services. However, DOTs Inspector General has re-
ported problems with the labor distribution system, which is part of the cost ac-
counting system and is used to account for and distribute air traffic controller labor
costs of about $3.1 billion annually to specific facilities and functions. The Inspector
General noted that the system omitted important internal controls needed to ensure
that the time worked by air traffic controllers would be accurately recorded in the
accounting system and paid from the proper account. The Inspector General brought
these deficiencies to the attention of FAA, and the Administrator agreed to correct
them. The Inspector General further noted that the system as designed could pro-
32
vide workforce data that would help determine how many controllers are needed
and where. These data would assist FAA in planning for the anticipated retirement
of large numbers of air traffic controllers in the near and long term. 26 Congressional
oversight is important to ensure that FAA follows through and corrects the prob-
lems that we and the Inspector General have identified so that FAA can spend its
resources on projects and services that will provide the greatest return on the
publics investment.
Scope and Methodology
This statement is based primarily on issued reports that are listed under Related
GAO Products. However, the sections on the Airport and Airway Trust Fund and
the Air Traffic Services Subcommittee reflect our ongoing work for this committee.
As a result, the results of this work that we discuss in this testimony are still pre-
liminary.
To assess the current and projected financial status of the Airport and Airway
Trust Fund, we obtained financial data from FAA and interviewed FAA officials fa-
miliar with the information. To assess the status of efforts to implement the new
structure established under AIR21 to improve the oversight, management, and op-
eration of the air traffic control system, we analyzed the legislation and related ex-
ecutive order, the Administrations reauthorization proposal, and the first report of
the Air Traffic Services Subcommittee. We also interviewed officials from FAA, the
Air Traffic Services Subcommittee, and aviation industry organizations. We per-
formed our work in accordance with generally accepted government auditing stand-
ards.
Contact Information
For further information on this testimony, please contact Gerald Dillingham at
(202) 5122834. Individuals making key contributions to this testimony include
Tammy Conquest, Howard Cott, Elizabeth Eisenstadt, Edward Laughlin, Belva
Martin, Maren McAvoy, John W. Shumann, Teresa Spisak, and Richard Swayze.
RELATED GAO PRODUCTS
FAA Purchase Cards: Weak Controls Resulted in Instances of Improper and Waste-
ful Purchases and Missing Assets. GAO03405. Washington, DC: March 21, 2003.
Commercial Aviation: Issues Regarding Federal Assistance for Enhancing Air
Service to Small Communities. GAO03540T. Washington, DC: March 11, 2003.
Airport Finance: Past Funding Levels May Not Be Sufficient to Cover Airports
Planned Capital Development. GAO03497T. Washington, DC: February 25, 2003.
National Airspace System: Reauthorizing FAA Provides Opportunities and Options
to Address Challenges. GAO03473T. Washington, DC: February 12, 2003.
Aviation Finance: Implementation of General Aviation Entitlement Grants. GAO
03347. Washington, DC: February 11, 2003.
Human Capital Management: FAAs Reform Effort Requires a More Strategic Ap-
proach. GAO03156. Washington, DC: February 3, 2003.
National Airspace System: Better Cost Data Could Improve FAAs Management of
the Standard Terminal Automation Replacement System. GAO- 03343. Washington,
DC: January 31, 2003.
Aviation Infrastructure: Challenges Related to Building Runways and Actions to
Address Them. GAO03164. Washington, DC: January 30, 2003.
Aviation Safety: Undeclared Shipments of Dangerous Goods and DOTs Enforce-
ment Approach. GAO0322. Washington, DC: January 10, 2003.
High-Risk Series: An Update. GAO03119. Washington, DC: January 2003.
Air Traffic Control: Impact of Revised Personnel Relocation Policies Is Uncertain.
GAO03141. Washington, DC: October 31, 2002.
Airport Finance: Using Airport Grant Funds for Security Projects Has Affected
Some Development Projects. GAO0327. Washington, DC: October 15, 2002.
National Airspace System: Status of FAAs Standard Terminal Automation Re-
placement System. GAO021071. Washington, DC: September 17, 2002.
Options to Enhance the Long-term Viability of the Essential Air Service Program.
GAO02997R. Washington, DC: August 30, 2002.
Air Traffic Control: FAA Needs to Better Prepare for Impending Wave of Controller
Attrition. GAO02591. Washington, DC: June 14, 2002.
Aviation Finance: Distribution of Airport Grant Funds Complied with Statutory
Requirements. GAO02283. Washington, DC: April 30, 2002.
Department of Transportation, Transportation Security Administration: Aviation
Security Infrastructure Fees. GAO02484R. Washington, DC: March 11, 2002.
Applying Agreed-upon Procedures: Airport and Airway Trust Fund Excise Taxes.
GAO02380R. Washington, DC: February 15, 2002.
33
National Airspace System: Long-Term Capacity Planning Needed Despite Recent
Reduction in Flight Delays. GAO02185. Washington, DC: December 14, 2001.
National Airspace System: Free Flight Tools Show Promise, but Implementation
Challenges Remain. GAO01932. Washington, DC: August 31, 2001.
Air Traffic Control: Role of FAAs Modernization Program in Reducing Delays and
Congestion. GAO01725T. Washington, DC: May 10, 2001.
Aviation Safety: Safer Skies Initiative Has Taken Initial Steps to Reduce Accident
Rates by 2007. GAO/RCED00111. Washington, DC: June 30, 2000.
National Airspace System: Problems Plaguing the Wide Area Augmentation Sys-
tem and FAAs Actions to Address Them. GAO/T-RCED00229. Washington, DC:
June 29, 2000.
National Airspace System: Persistent Problems in FAAs New Navigation System
Highlight Need for Periodic Reevaluation. GAO/RCED/AIMD00130. Washington,
DC: June 12, 2000.
Federal Aviation Administration: Challenges in Modernizing the Agency. GAO/T-
RCED/AIMD0087. Washington, DC: February 3, 2000.
Air Traffic Control: Status of FAAs Implementation of the Display System Re-
placement Project. GAO/T-RCED0019. Washington, DC: October 11, 1999.
Aviation Safety: FAAs New Inspection System Offers Promise, but Problems Need
to Be Addressed. GAO/RCED99183. Washington, DC: June 28, 1999.
General Aviation Airports: Oversight and Funding. GAO/T-RCED99214. Wash-
ington, DC: June 9, 1999.
Passenger Facility Charges: Program Implementation and the Potential Effects of
Proposed Changes. GAO/RCED99138. Washington, DC: May 19, 1999.
Airport Improvement Program: Analysis of Discretionary Spending for Fiscal Years
199698. GAO/RCED99160R. Washington, DC: May 18, 1999.
Air Traffic Control: FAAs Modernization Investment Management Approach Could
Be Strengthened. GAO/RCED/AIMD9988. Washington, DC: April 30, 1999.
Air Traffic Control: Observations on FAAs Air Traffic Control Modernization Pro-
gram. GAO/T-RCED/AIMD99137. Washington, DC: March 25, 1999.
Federal Aviation Administration: Financial Management Issues. GAO/T-AIMD
99122. Washington, DC: March 18, 1999.
Airport Financing: Smaller Airports Face Future Funding Shortfalls. GAO/T-
RCED9996. Washington, DC: February 22, 1999.
Airport Financing: Annual Funding As Much As $3 Billion Less Than Planned
Development. GAO/T-RCED9984. Washington, DC: February 10, 1999.
ENDNOTES
1 See the Aviation Investment and Revitalization Vision Act, a Senate bill to reau-
thorize federal aviation programs and the Administrations draft reauthorization
proposal, the Centennial of Flight Aviation Authorization Act, or Flight100.
2 U.S. General Accounting Office, Aviation Safety: FAAs New Inspection System
Offers Promise, but Problems Need to Be Addressed, GAO/RCED99183 (Wash-
ington, DC: June 28, 1999).
3 U.S. Department of Transportation, Office of Inspector General, Report on the
Air Transportation Oversight System: Federal Aviation Administration, AV2002
088 (Washington, DC: Apr. 8, 2002).
4 Over the past 5 years, the amount of funding available to airports for planned
capital development ranged from about $7 billion to $13 billion annually.
5 The Airport and Airway Trust Fund was established by the Airport and Airway
Revenue Act of 1970 (P.L. 91258) to aid in funding the development of a nation-
wide airport and airway system and to fund FAA investments in air traffic control
facilities. The Trust Fund is supported by a number of excise taxes, including taxes
on passenger tickets, fuel, and cargo.
6 Under the Passenger Facility Charge program, airports with FAAs approval
may charge passengers up to $4.50 for boarding airplanes at their facilities.
7 U.S. General Accounting Office, Airport Finance: Using Airport Grant Funds for
Security Projects, GAO0327 (Washington, DC: Oct. 15, 2002).
8 Letters of intent represent a nonbonding commitment from FAA to provide
multiyear funding to an airport beyond the current AIP authorization period.
9 This was the average for 1998 through 2002.
10 In addition to runways, the plan addresses capacity enhancements designed to
make more efficient use of the airspace.
11 U.S. General Accounting Office, Aviation Infrastructure: Challenges Related to
Building Runways and Actions to Address Them, GAO03164 (Washington, DC:
Jan. 30, 2003).
34
12 U.S. General Accounting Office, National Airspace System: Long- term Capacity
Planning Needed Despite Recent Reduction in Flight Delays, GAO02185 (Wash-
ington, DC: Dec. 14, 2001).
13 U.S. General Accounting Office, Commercial Aviation: Issues Regarding Federal
Assistance for Enhancing Air Service to Small Communities, GAO03540T (Wash-
ington, DC: Mar. 11, 2003).
14 U.S. General Accounting Office, High-Risk Series: An Update, GAO03119
(Washington, DC: Jan. 2003).
15 These five programs are the Wide Area Augmentation System, Standard Ter-
minal Automation Replacement System, Airport Surveillance Radar11, Weather
and Radar Processor, and Operational, Supportability, and Implementation System.
See U.S. Department of Transportation, Office of Inspector General, Reauthorization
of the Federal Aviation Administration, CC2003058 (Washington, DC: Feb. 12,
2003).
16 U.S. General Accounting Office, National Airspace System: Better Cost Data
Could Improve FAAs Management of the Standard Terminal Automation Replace-
ment System, GAO03343 (Washington, DC: Jan. 31, 2003).
17 This is a result of 1995 legislation that granted FAA broad exemptions from
laws governing federal civilian personnel management found in title 5 of the United
States Code.
18 U.S. General Accounting Office, Human Capital Management: FAAs Reform Ef-
fort Requires a More Strategic Approach, GAO03156 (Washington, DC: Feb. 3,
2003).
19 Commercial aviation includes both large air carrier operations and smaller com-
muter operations. General aviation includes a wide variety of aircraft, ranging from
corporate jets to small piston-engine aircraft as well as helicopters, gliders, and air-
craft used in operations such as firefighting and agricultural spraying.
20 U.S. General Accounting Office, Aviation Safety: FAAs New Inspection System
Offers Promise, but Problems Need to Be Addressed, GAO/RCED99183 (Wash-
ington, DC: June 28, 1999).
21 U.S. Department of Transportation, Office of Inspector General, Report on the
Air Transportation Oversight System: Federal Aviation Administration, AV2002
088 (Washington, DC: Apr. 8, 2002).
22 FAA has responsibility for maintaining the security of its air traffic control fa-
cilities and computer systems.
23 As of January 2002, over 8,000 FAA employees (17 percent of its workforce) had
been issued commercial purchase cards. In Fiscal Year 2001, FAA made over
364,000 purchases using these cards.
24 U.S. General Accounting Office, FAA Purchase Cards: Weak Controls Resulted
in Instances of Improper and Wasteful Purchases and Missing Assets, GAO03405
(Washington, DC: Mar. 21, 2003).
25 Department of Transportation, Office of Inspector General, DOTs Top Manage-
ment Challenges (Washington, DC: Jan. 21, 2003).
26 U.S. General Accounting Office, Air Traffic Control: FAA Needs to Better Pre-
pare for Impending Wave of Controller Attrition, GAO02591 (Washington, DC:
June 14, 2002).
The CHAIRMAN. Thank you, Dr. Dillingham. Senator Stevens.
STATEMENT OF HON. TED STEVENS,

U.S. SENATOR FROM ALASKA
Senator STEVENS. Thank you very much. I have to go back to
that conference, but Ms. Van de Water, I do not know if you realize
it, but the Essential Air Service was created by this committee at
the time of the deregulation of the airlines and elimination of CAB
specifically for the Alaska communities that were small commu-
nities that had only access to the world by air, and there are some,
almost 200 of those. Many of them, in terms of today, now have un-
employment ratios of 80 to 90 percent. They have no tax base be-
cause they are surrounded by Federal lands that have been with-
drawn for parks and wildlife refuges and wild and scenic rivers,
and forests.
35
I would urge you to come up with Ms. Blakey and visit us, be-
cause I do read with interest your statement that said we recognize
there are certain circumstances under which a community might
not be required to make a financial contribution due to special geo-
graphical considerations. I think inability to pay ought to be one
of the considerations, too. Have you taken that into consideration?
Ms. VAN DE WATER. That is not specifically contemplated in the
drafting language, but I think your State, as well as the State of
Hawaii, would qualify under the special geographic considerations.
Your communities generally are only accessible by air, and we are
aware of that. That is also the case with some of the communities
in Hawaii.
Senator STEVENS. I understand the geographical concept, but
there are some that even including geographical location just have
an inability to pay. I would urge you to consider that. I think some
of them even have an inability to pay to go through the process to
make applications. I would urge you to come take a look at some
of those areas.
I do not know what to do about them. They are totally isolated.
They are totally impoverished. Their economy is gone. The mining
operations are gone, the timber operations are closed, the oil and
gas wildcatting is closed, tourism is impossible, and they have no
basic income, other than what they get from the State or Federal
Government. I just would like you to visit a couple of those places,
if you can.
The CHAIRMAN. Ms. Blakey, more than $560 million in the AIP
was used for security-related expenses in Fiscal Year 2002, which
was up from $57 million the previous year. Earlier this year, TSA
Under Secretary Loy testified that TSA would like to have, quote,
one more bite at the apple, unquote, in 2003, and use a similar
amount of AIP for high-priority security projects.
Now, in the bill we are considering we block the use of those
funds, although it may be too late for the 2003, it may not. What
is your view on this one more bite at the apple idea that Secretary
Loy seems to be supporting?
Ms. BLAKEY. Well, I do not want TSA to bite too close to the core,
I will tell you that, so the bite analogy makes me a little nervous.
That said, I believe that we have factored in the needs for these
airports this year again in a way that we can sustain the requests
that are coming in for security projects up to about the same point
as last year, somewhere above $500 million.
By virtue of the kinds of approach this committee and others
took with AIP funding previous to 9/11 we got a little bit ahead of
the curve on some of the maintenance areas with our airports,
therefore things like pavement, for example, we are still not in a
situation this year where we are likely to really be undercutting
absolutely required work that has to be done from a deteriorating
standpoint.
We have got a number of projects that are underway, and we will
be able to sustain them, but come next year I think there is no
question about the fact that we will then be cutting in both to the
kinds of ongoing work that has to be done to maintain our capacity,
36
and certainly in terms of improvements we will have some prob-

lems.
The CHAIRMAN. Well, I want to assure you that we will take this
issue seriously in consideration in this legislation. I do not think
we can continue to take that much money out of AIP without pay-
ing a very heavy price later on.
Do you agree with that, Dr. Dillingham?
Dr. DILLINGHAM. Yes, I do, Senator. Last year, because of that
half billion dollars bite, I think our research showed there was
close to $148 million in funding for reconstruction, $156 million for
bringing airports up to standards, and three letters of intent for
runways that were not issued, so it can definitely have an effect.
The CHAIRMAN. Ms. Blakey, the DOT Inspector General recently
noted, and I quote, cost control must become an imperative for
FAA, which has not been the case for sometime. First of all, Dr.
Dillingham, do you agree with that statement of the DOT Inspector
General?
Dr. DILLINGHAM. Yes, Mr. Chairman, we do. As we said in our
statement, there are at least a couple of places where cost controls
are very important in a time when resources are becoming more
and more limited.
The CHAIRMAN. Now, Ms. Blakey, I was part of the legislation
that we gave the FAA unusual authority to set up its own per-
sonnel system because we thought that the FAA could probably do
it better. I have been one who disagrees with micromanagement by
Congress in legislation, but clearly, you failed, the FAAnot you
personally, but the FAA has failed miserably in the view of every
watchdog organization. Now, you have got to get these costs under
control.
I do not know if we need a legislative remedy. I think Senator
Lott may have some views on that, as well as Senator Rockefeller,
but (1) you have got to get it under control, and (2) do you believe
that we need some legislative remedies?
Ms. BLAKEY. Well, as you know, I have been there a full 7
months, so I will not pretend I have all the answers on this front
right now. The Congress did give the FAA a very unusual charge
as a part of the personnel reform, having us negotiate with our em-
ployees for compensation. It is virtually unprecedented in the Fed-
eral Government, because obviously this is not the same as the pri-
vate sector, where at the end of the day one can increase profit,
therefore change the dynamics on the budget.
The budget is a fixed matter, and with that in mind I think it
has certainly proven that that in particular has driven up the oper-
ating costs of the FAA. 80 percent of our operating cost is in per-
sonnel, so one has to look at that very carefully.
At this point, I am committed to working through the negotia-
tions we have with our unionized workforce. Most of the parts of
the FAA right now are without a working contract. We are still try-
ing to make that possible, but I will tell you it is a great challenge,
and I think that the Congress will probably be seeing, therefore,
some of these negotiations come to an impasse and come to the
Congress unless we are able to work through more successfully
than the last Administration was on that front.
37
The CHAIRMAN. Thank you. Dr. Dillingham, do you have any

comments on that issue, and thank you for your good works, by the
way.
Dr. DILLINGHAM. Thank you, Mr. Chairman. I think that some
of the remedies that Congress has already provided need to work
themselves out a little more before legislation would be necessary.
As you know, prior to Administrator Garveys tenure I think the
average tenure for the Administrator was about 18 months, so pri-
orities kept shifting. We have said all along that the remedies are
there, but they need to be fully implemented, and the Congress can
help by making sure that they are fully implemented.
The CHAIRMAN. Would you do us the favor of providing us, the
Committee, with the specific remedies you think need to be en-
forced that are existing, for the record?
Dr. DILLINGHAM. Yes, sir.
The CHAIRMAN. Thank you. Senator Rockefeller.
Senator ROCKEFELLER. Thank you, Mr. Chairman. I want to get
back, Ms. Van de Water, on this EAS thing. Senator Stevens really
did make a point, the geography is one part of it. I do not know,
have you ever been to West Virginia?
Ms. VAN DE WATER. Yes, sir.
Senator ROCKEFELLER. Where?
Ms. VAN DE WATER. In the Shenandoah River, rafting. It was a
vacation.
Senator ROCKEFELLER. There are no airports near there.
Ms. VAN DE WATER. I drove.
Senator ROCKEFELLER. But it is a nice ride. It is a nice ride.
The question of airports, not having the money to pay, is very
real. Now, you can take the point of view that, well, air traffic is
down, the economy is bad, and you can react to that in two ways.
One, you can say, well, because the economy is down, we do not
have the money, or you can say, because the economy is down it
is because there is something called the FAA, the Department of
Transportation, we have an obligation to make sure that transpor-
tation works, and I would assume if I were working for the DOT
I would take that second point of view.
I really believe that if you end Essential Air Service and the abil-
ity for communities to improve their prospects through lengthening
runways or whatever, it is like rolling up the interstate highway
system. I do not think there is any difference. I mean, I make a
point, which is either right or wrong, and I do not really care at
this point, that airline travel and air cargo travel is as important
to this country as truck travel and passenger car travel on high-
ways. I think they are about equal, and for the future I think air-
lines continue to grow in importance, and air travel, air cargo con-
tinues to grow in importance.
Now, all of that identifies a very interesting question. If a com-
munity is small and remote, but has, for example, Americans living
close by, we generally in America do not distinguish between Amer-
icans who live in cities as being more important than Americans
who live in rural areas. We do understand sometimes they have
more services available. We do not decide to cutoff services.
You did that actually in Essential Air Service, and you cutoff the
Small Community Air Service Development Pilot Program, and
38
then you created the Small Community Transportation Service,

and when I see a name like that I get nervous, because I cannot
identify with what it is going to do, and I do not know what it is
going to do.
Now, you have indicated that you will look at exceptions and
take into consideration geography, and then you have made an-
other statement as to Alaska and Hawaii, but airports can survive
and be essential in their air service and not have the money to pay.
Now, if you get to that situation you can say, well, I am going to
push you to your limits. You have not done it before. You do not
want to, I understand that, or some of you have not, and I am
going to push you to your limits, but what if their limits, in fact,
are because of those precise lacks of passenger and therefore rev-
enue to them, and security, this and that. What if they really can-
not pay.
Ms. VAN DE WATER. Senator, we would like to give as much dis-
cretion to the Secretary as possible in these programs.
Senator ROCKEFELLER. That makes me nervous, too. You see, dis-
cretion means that there is no pattern. There is nothing that any
airport can count on and plan on.
Ms. VAN DE WATER. But if we do not have discretion, we are
forced to treat a community that, for instance, is under 60 miles
from Syracuse, New York, which has dozens and dozens of jet
flights a day to several different hubs, including low-fare service by
Jet Blue, we are statutorily required to treat that community just
like we treat a community in the middle of Montana that is 6
hours from a hub, or one in West Virginia that may be several
hours from a hub, maybe not on a good road, and maybe cannot
afford to pay, but if we do not have discretion, we quickly run out
of money, because we have to treat each EAS community exactly
the same, and that is the problem we face in the program now.
The New York communitywhich can hop in a car, it is a
straight interstate shot down to Syracuse, be at Syracuse in an
hour, and fly many places across the countryhas the same right
as your community does, or a community in Montana, or in Ne-
braska, which might be just as isolated, so if we do not have the
discretion, we do not have any way to effectively manage the re-
sources for the program.
Senator ROCKEFELLER. So you would divide your discretion sort
of literally into those which are close to major hubs and those
which are not? I mean, our hubs are Pittsburgh, which is fine if
you are in the northern part of the State, and Atlanta, which is a
great distance off, and, to some extent, Dulles, but we just have
Bluefield, West Virginia; Beckley, West Virginia; Huntington, West
Virginia.
I mean, I watched, like Senator Stevens, when all of these East-
ern, United, all had jets flying in and out, and then 1978 came and
wise people voted against deregulation. I was not here, so I could
not do that, but I would sure love to.
But it is a very, very damaging situation, the same situation in
Mississippi. California north of San Francisco is rural. Every State
has rural places, and I just want to make sure thatI mean, did
you talk with any of these EAS communities?
39
Ms. VAN DE WATER. Yes, sir, we did, and we looked at the GAO
report and other studies have been done, and we have extensive ex-
perience with EAS, too. I think I mentioned in my hearing a few
weeks ago I spend more time on EAS than any other airline issue
out there, including security and including the war, including
SARS or any other aviation issue that might be up. We work a
whole lot with EAS communities.
Senator ROCKEFELLER. Good. OK, well, that is good.
Ms. Blakey, I would just ask a question of you. Fundamentally,
GAO suggested you may have as many as 5,000 air traffic control-
lers retiring in the next 3 to 5 years.
Ms. BLAKEY. That is correct.
Senator ROCKEFELLER. How long does it take you to train?
Ms. BLAKEY. This varies, of course, with the facility. Somewhere
between 2 and 4 years. I think GAO used 3 as a good number, and
so I would suggest it depends, but 3 is a good number.
Senator ROCKEFELLER. Are you going to be able to do this?
Ms. BLAKEY. I think so. Certainly we see from the numbers we
have right now that we are requesting for next year just over 300
additional controllers to overlap with the existing workforce to
start ramping up on this training.
It is certainly our anticipation that we are going to have to do
that for a number of years to come to cover this anticipated bubble.
There is nothing very scientific, of course, about retirements. You
cannot predict exactly how this is going to fall, nor from which fa-
cility and how it will work, but we are working carefully this year
to try to fine-tune this projection. I think the work GAO did,
though, is fundamentally sound, and we are trying to build on that.
Senator ROCKEFELLER. Are you going to have the money to do
this, the training and hiring?
Ms. BLAKEY. The training and the money for the work that we
are projecting, yes. In fact, we have built it into the request for $14
billion for next years budget.
Senator ROCKEFELLER. Will the FAA Director and the Depart-
ment of Transportation and the Secretary be willing to contemplate
with a warm smile a bill that might emerge from this committee?
Ms. BLAKEY. As to the reauthorization broadly? Well, I should
certainly think so. We are looking forward to working with you.
Senator ROCKEFELLER. I mean, we are good people. You like to
work with us, right?
Ms. BLAKEY. Absolutely. We are impressed by the momentum,
certainly, and we are impressed by the areas of real consensus that
are clearly there, so we look forward to working with you on it.
Senator LOTT. How about that. That is good.
Senator ROCKEFELLER. I think that is good. Thank you, all of
you.
Senator LOTT. (presiding) Thank you, Senator Rockefeller. We
are glad to have Senator Lautenberg with us, and I will call on you
in a moment, Senator Lautenberg, but let me ask a couple of ques-
tions that I have been sort of saving up here.
Administrator Blakey, thank you again for your work. Now, our
bill makes this a 3-year bill. Your proposal was 4 years. Some on
the Committee would like for it to be only 2. I hear the House is
40
thinking 4. What difference does it make? What would be the pre-

ferred number? Obviously, you have suggested 4.
I am inclined to like it longer, personally, because of what I said
at the beginning. It gives predictability and stability, what they
can count on. They can look down the road, and that is what I am
hoping, that in a year or two we are going to see the aviation in-
dustry, having gone through all kinds of changes, gaining strength
and making a profit again, and I think the reliability of the pro-
gram would help in that.
Ms. BLAKEY. Well, certainly I would agree with you. I think that
principle is a very sound one, and whether it is 3 or 4 I think cer-
tainly could be debated. The reason we selected 4 is that the rev-
enue streams that support the trust fund, in other words the tax
base and the statutory requirement for those taxes expire in 2007,
and so in light of that, we felt that that would probably be a good
year to consider, then, reauthorization, because at that point, there
will be the opportunity to look at the revenue streams going into
the trust fund and, as you know, between now and then we are all
projecting that the trust fund will diminish.
Senator LOTT. We have a problem with the cost in providing for
the new explosive detection devices, the EDS, and very large esti-
mates of what that is going to cost over the next few months, and
I guess the next couple of years, and we are trying to find a fund-
ing mechanism that would help pay for that and not have it come
out of the AIP fund, as we have all talked about and Dr.
Dillingham has spoken about, and Senator McCain and I care
about it.
Now, we do have in our bill, I believe, a proposal that would say
it would take the security fund piece and put that into a fund for
grants to pay for this. That was one way to go. I can imagine the
airlines do not particularly like that either. They would like that
fee to go away. What do you think about that mechanism, or do
you have any other ideas of how we might do this?
Ms. BLAKEY. Well, certainly we were glad to see that it was not
looking to the AIP funds for the ongoing support for EDS and other
security requirements. The $2.50 security fee that, of course, is cur-
rently being charged is much debated at the moment, and I know
that in some of the various stimulus packages that are being con-
sidered by this Congress it is therefore in play, but certainly from
the standpoint of the FAA, since this is not a fee of ours, I would
simply say that I was glad to see that you all did not look to AIP.
Senator LOTT. Have you got any other ideas?
Ms. BLAKEY. This is the hard one. I am afraid I do not.
Senator LOTT. Ms. Van de Water, thank you for your testimony.
The Small Community Air Service Development Pilot Program you
talked about the last time, you said you still did not have perhaps
enough information about the results. I hear it has worked well.
Does the Administration have a problem with us extending that
program?
Ms. VAN DE WATER. I think we would like to have more time to
get feedback. Your community of Meridian has done very well. It
started up quickly. Not all communities have started up quickly.
Some have not even expended any of their funds yet. I think we
would like some more time to look at it, but we tried to take some
41
of the more attractive parts of it and put it into our central trans-
portation service to let more communities participate.
Senator LOTT. Now, on the local match proposal, do you want to
expand any more on the local match? You are going to get resist-
ance from this community about any kind of local match, 25 per-
cent, 10 percent, or even 5 percent, but I maintainand I must
state it is hard for us to come up with a match, we are one of the
poorest States in the Nation, but I view it as anyone who gets a
benefit ought to pay a little.
Ms. VAN DE WATER. Meridian came up with a match.
Senator LOTT. Especially when it creates growth in the economy
and creates jobs, some sort of match it seems to me is defensible.
Ms. VAN DE WATER. And Meridian came up with a good match.
They got a $500,000 grant from the Federal Government. They
came up with $140,000 of local match. We have some communities
that came up with over $1 million of their own match. The match
does not have to come just from the community. It can come from
the State, it can come from business sources, it can be a travel
bank. We have a lot of flexibility there, but we think that is the
best way for a community to get vested in their service, and to
have a true incentive to actually use the service.
We have a community now, for example, that is enplaning three
passengers a day on over 50 seats a day, and they are 72 miles
away from a major hub, and they came in to see us recently very
upset that we would contemplate not extending their EAS service,
which has gone over the statutory maximum of $200 per person.
They are enplaning three people a day, so until there is some buy-
in, we are not going to get the kind of support we need for the pro-
gram.
Senator LOTT. Dr. Dillingham, thank you again for your appear-
ance. In a previous GAO report you found that Federal fiscal dis-
cipline may require various changes in the EAS program, and you
put forth a set of options changing eligibility criteria requiring com-
munity matches, consolidating service to multiple communities,
and changing the subsidy to a grant.
Do you still stand by that, or do you have any other suggestions
you might want to offer on EAS, because that is an area where our
bill is not set yet, and we are going to be considering a number of
options there to try to make it the best program we can.
Dr. DILLINGHAM. Chairman Lott, many of the things that we sug-
gested in our earlier report are contained in the proposal that is
on the table now for the small community service, and we stand
by that. I would like to add, there are going to be pockets of pain,
particularly in those places that will not have a subsidy, whether
it is 10 percent or 5 percent. That have to be addressed.
For some communities, coming up with the 5 percent match will
be difficult. As such, I think it is important that some of the alter-
native transportation modes that are a part of the service will be
really strong if we come to that point.
Senator LOTT. Because of time considerations, and I know Sen-
ator Lautenberg will have some questions or make some comments,
two sections I wish you would take a look at, Administrator
Blakey, are section 212 of the bill, prohibition on requiring airports
42
to provide rent-free space for FAA or TSA. I think there is a big

problem with TSA taking space and not paying for it.
I think TSA is demanding things now that are unfunded man-
dates, like telling small regional airports you have got to reinforce
the east front of your terminal, which they cannot afford, it is ridic-
ulous, and you must do random searches of cars in public airports.
What I tell my local officials is, tell them no. Justify it, or give me
the money, or no.
So I do hope you will take a look at that. Some of the things that
have been happening in the name of security, legitimately I think
we did everything possible, and I think maybe we have overreached
a little bit, and we begin to be a little more practical and use a lit-
tle more common sense, and also section 502, cost-sharing of air
traffic modernization projects, I invite your attention to that sec-
tion. Let me know what you think about it later on, perhaps.
Senator Lautenberg.
STATEMENT OF HON. FRANK LAUTENBERG,

U.S. SENATOR FROM NEW JERSEY
Senator LAUTENBERG. Thank you, Mr. Chairman, and thank you,
Ms. Blakey and Ms. Van de Water and Dr. Dillingham. I am par-
ticularly focused in one area at the moment, and I greatly respect
the responsibility and the work that is done by each of you in con-
nection with our aviation interests, and the condition of our sys-
tem, and what we might be looking for in the future, and there are
so many important issues facing us and I look forward to working
with our Chairman to see if we can make some improvements here.
We all know that it costs more, and we are trying to do more for
less, and that is a tough situation. I am particularly concerned
about the moves that are suggested toward the privatizing of the
air traffic control system. I know Ms. Blakey has heard me talk
about this before.
In the aftermath of September 11, the American people de-
manded one thing in particular of their Government, and that is,
they wanted committed, trained personnel to perform security
screenings of baggage at our Nations airports. We saw that mam-
moth change that took place with the baggage handlers. Salaries
went up, thank goodness, for people who were doing the screening,
to an extraordinary pace, because the pay scale was unfair to those
who would have talent and ability, so we made the change, and at
the same time now we are taking a look at the possibility of taking
our Federal air traffic controllers and flight specialists, flight serv-
ice station controllers, who are top flight professionals, very well-
trained in every one of those positions.
That is a skill, and you have to develop a kind of a sixth sense
to do that job properly, but when you come to air traffic controllers
and recognize that it is not a single bag that you are trying to pick
up, but rather trying to protect lives of a few hundred people
aboard, or whatever it is, it is an enormous responsibility, and to
suddenly turn to the cheaper way of doing things does not sound
like it is the right way to go for me. I think our colleagues here
will agree, as the testimony that we gather, the information that
we develop is put in front of everybody.
43
So I was so surprised to hear that the Administrations air traffic

control of its, inherently governmental, status last year setting
the stage for privatization. To me that makes no sense, especially
after September 11. The people felt safer with Government staff in
control rather than private contractors, and the job that was done
that day to close down the system in an orderly fashion was quite
an undertaking, and very well done, and I do not think that the
public, hearing the details here, would be particularly happy to un-
derstand that we are gong to put it out to the lowest bidder.
Ms. Blakey, I understand that the FAA is conducting a study for
contracting out flight service station controllers. How much is this
study costing?
Ms. BLAKEY. The study that was done looked at the flight service
station services, which are largely providing weather information
this is not, of course, the group that controls traffic.
Senator LAUTENBERG. But they are all included in the not inher-
ently Government, right?
Ms. BLAKEY. The distinction I would make is this. The flight
service stations are a group of employees, who are largely providing
for the general aviation community and some of the business com-
munity weather information, and it is something that, after a study
was done to see if they could be a market alternative, that deter-
mination was made that we could.
Now, the work we are doing otherwise is internal, and it will
take a couple of years to go through what is called A76 process,
which allows the opportunity for the existing pool of employees to
put forward a proposal to do this as efficiently as possible and pro-
vide for others in the private sector to do the same thing.
The A76 process is one that has proven to result, in an average
of about a 30 percent reduction in cost, whether or not the ultimate
contract stays within housewithin the Governmentor goes into
the private sector. I would point out that our employees have an
advantage. If they are within 10 percent of the bids that come in
from the private sector, they will be able to provide the work, but
right now, this is a significant area of cost for the FAA, over $300
million a year, and we have definitely found that the same services
can be offered from the private sector.
This is a process that the Congress put in place with the A76
process many years ago, and as we analyzed it, this is an area I
think for the FAA to look for some cost savings.
Senator LAUTENBERG. I wonder whether, if we were doing cancer
research and research on other diseases and problems of human-
kind and said, OK, we are going to get into the laboratory, but you
have got to be the cheapest, or among the cheapest ones in town,
how Americans would feel about that, or go to the Bethesda Naval
Hospital and say, OK, what we are going to do is, we are going to
find the cheapest way to do it. There are some jobs you would not
dream of doing a cost search on before you determined whether or
not that ability is there.
I would hate to have my family flying around up in the sky while
there is a labor dispute in a given company, and there might be
an agreement that that would be excluded from any negotiation,
that the rules would be strict and so forth, but I would not want
to have a disgruntled person out there managing the flight service
44
or doing the work at an airport and saying, well, we have been a

little skinny on the wages, but this guy works hard so let him stay
at the desk, even though the price factor was the one that got us
there.
Ms. BLAKEY. Let me just reaffirm for you the fact that we do not
have any intent to move toward privatization of any of our towers,
air traffic control facilities, centers, et cetera. This is really those
that are actually controlling traffic. There is no move to move fur-
ther into privatization. As you know, the contract tower program
has proven to be one that has worked well over many years.
Senator LAUTENBERG. And small centers.
Ms. BLAKEY. Exactly, and those are little activity airports where
in fact in some cases we simply would not have towers at all and
be able to provide service, so that is something that for over 20
years has worked well, but we are not talking about substantially
increasing it nor making any change for our controllers in terms,
as I say, of our towers, TRACONs, and centers.
Senator LAUTENBERG. If that is the case, why dont we imme-
diately in our statements eliminate that group from any consider-
ation and say, look, they are outside the loop. We are not going
public-to-private ownership with that.
When we look at the countries that have gone private, the U.K.
and Canada and so forth, there have been all kinds of problems,
Mr. Chairman, where we have had to bail out a couple of the com-
panies because they could not make it under the rules, under the
conditions that they took the contracts, and imagine that.
I mean, we are so dependent on aviation and the progress we
have made in our system, to have a price of service become a de-
bate while maybe a million people a day are flying across America,
you get the sense, Ms. Blakey, I do not like the idea.
Ms. BLAKEY. I definitely do.
Senator LAUTENBERG. I did not mean to convey that.
But anyway, Mr. Chairman, I have several other questions. I
wanted to tell you, Ms. Blakey and I have had conversations. She
is really a top flight executive and doing a good job, and I am sure
down deep she really hates to scream with me, but I thank all of
you for your participation.
Senator LOTT. Thank you, Senator Lautenberg, and I want to
thank the panel again. We are looking forward to working with you
over the next month and getting this legislation into law. Thank
you.
Senator LAUTENBERG. I would submit other questions.
Senator LOTT. Yes. Any questions you would like to submit for
the record, I am sure the witnesses would be glad to respond in
writing.
The hearing is adjourned.
[Whereupon, at 11:25 a.m., the Committee adjourned.]
A P P E N D I X
RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. JOHN MCCAIN TO
MARION C. BLAKEY
Question 1. More than $560 million in AIP was used for security-related expenses
in FY 2002, up from only $57 million the previous year. Earlier this year, TSA
Under Secretary James Loy testified that the TSA would like to have one more bite
at the apple in FY 2003 and use a similar amount of AIP for high priority security
projects. What effect has the use of the $560 million in AIP in FY 2002 had on other
safety- and capacity-related airport improvement projects? What is your view on the
use of AIP funds for even more security costs in FY 2003? What affect would the
use of AIP at FY 2002 levels have on other projects in FY 2003? Long-term, what
is your view on the use of AIP funds for security-related projects?
Answer. Despite record levels of AIP expenditures in FY 2002 to help airports
meet new security requirements imposed in the wake of the terrorist attacks of Sep-
tember 11, the FAA was able to fund all AIP requests for safety projects, including
runway safety areas and runway safety action team recommendations; letter of in-
tent commitments; noise mitigation and reduction projects, ongoing phased projects;
and congressional earmarks. The LOIs and phased projects represent commitment
of significant AIP resources to capacity projects. The FAA also provided substantial
AIP funding for rehabilitation projects, though there was a reduction in reconstruc-
tion and standards projects.
Working collaboratively with TSA and the Department of Transportation, the
FAA has committed to make a comparable level of AIP funding available for secu-
rity projects in FY 2003with a significant share going toward terminal modifica-
tion and reconfiguration costs associated with in-line EDS deployment. These costs
were made eligible for AIP funding for the first time in the Aviation and Transpor-
tation Security Act. We are confident that the system can sustain this level of AIP
support for security for one more year without compromising other national objec-
tives in building and sustaining this nations system of airports.
The FAA does not anticipate that the unprecedented level of security needs will
be sustained on a continuous basis, once deployment of explosive detection systems
for check baggage is fully implemented. Therefore, we do not anticipate that this
tension will be sustained on a long-term basis. In the mean time, the FAA will con-
tinue to work closely with the Secretary of Transportation, the TSA and this com-
mittee to assure that the appropriate balance is struck between funding for security
and other national priorities.
Question 2. The Administration bill contained a number of changes related to FAA
management. Which of these do you believe would be the most useful to you as the
FAAs Administrator?
Answer. It would be difficult to choose oneas all of the proposed changes im-
prove the management of the FAA. The changes related to the COO improved the
ability to recruit for the position and will make the job more easily defined as a
COO. The changes proposed for the Management Advisory Council and Air Traffic
Services Subcommittee reflect how they interact with the FAA, therefore making
the changes to law a requirement. We would hope Congress would appreciate the
need for all of these management changes.
Question 3. In its reauthorization proposal and in its budget request, the Adminis-
tration proposes a major spend down of the Airport and Airway Trust Fund over
the next several years. How would the spend down of the Trust Fund affect capital
programs like AIP? Doesnt such a spend down mean that a tax increase is needed
after FY 2007?
Answer. We remain committed to using the Airport and Airway Trust Fund
(AATF) only to fund the Departments aviation programs, but in a change from
AIR21, the Administration is proposing to increase our use of balances that have
built up in the Trust Fund.
(45)
46
The Administrations spend down proposal does not impact capital programs.
These programs are maintained at comparable levels to those provided under AIR
21.
Under our budget and reauthorization proposals, we are projecting an uncommit-
ted balance of just over $1.1 billion at the end of FY 2007. This balance would be
down from a $4.8 billion uncommitted balance at the end of FY 2002.
FY 2004 Funding ($ in millions)

FAA Account Under AIR21 formula Under FY04 Pres. Bud.
Facilities & Equipment 2,916 2,916

Grants-in-Aid for Airports 3,400 3,400
Research, Engineering & Development 100 100
Operations (Trust Fund) 4,511 6,000
Operations (General Fund) 3,080 1,591
Total 14,007 14,007
At this time it does not appear that a change in the current aviation excise tax
structure is warranted in order to maintain a positive uncommitted balance even
though the AATF is being spent down over the next few years.
Question 4. As you know, the FAA was given unusual authority by the Congress
to set up its own personnel system, including setting its own pay structure. The ex-
pectation was that in return, the FAA would hold its employees more accountable
and develop more of a performance based culture. Based on work by the GAO and
the Inspector General, it is fair to conclude that this hasnt happened.
How are you addressing this issue?
Do you believe that any legislative changes are needed to the FAAs legislative
authority in this area?
Do you believe you can achieve a truly performance based culture at the FAA?
Answer. I believe that since the implementation of personnel reform in April
1996, the FAA has made significant progress in implementing innovative human
capital management policies, systems and practices that supported achievement of
the agencys mission, business objectives and goals, and helped transition the orga-
nization to a more performance-based work culture.
In a 1999 congressionally mandated evaluation of personnel reform, the National
Academy of Public Administrations Center for Human Resource Management de-
scribed the scope of FAA human capital reform as a large scale change management
initiative that was unparalleled in the Federal sector. Change of this magnitude
takes on average seven to even 10 or more years to implement successfully. Based
on this benchmark, the FAA is on course in moving away from an entitled and bu-
reaucratic work culture to one driven by performance and innovation.
The existing personnel reform flexibilities related to staffing and pay have signifi-
cantly increased managers accountability for strategically managing their work-
force. We have delegated flexibility to FAA lines of business to determine recruit-
ment sources, methods of advertising jobs, and methods for evaluating and inter-
viewing applicants. Managers have flexibility in setting pay and the use of recruit-
ment and retention incentives under a market-based compensation system. These
reform initiatives have allowed the FAA to be more competitive in acquiring and
retaining the talented workforce necessary to perform our mission and meet emerg-
ing business challenges.
We established annual corporate Organizational Success Increase goals, which are
aligned with satisfactory performance against FAA mission objectives and directly
linked to pay increases to achievement of organizational goals. As part of our mar-
ket-based compensation system, annual Superior Contribution Increases are pro-
vided to top performers, who make superior individual performance contributions.
For each FAA executive, we established annual Short Term Incentive stretch goals,
directly aligned with accomplishing results beyond normal performance expecta-
tions. Alignment of individual employee performance expectations with agency goals
created an important line of sight between individual performance contributions and
organizational goals, and improved the FAA focus on obtaining results.
We further strengthened the agencys performance culture by developing and im-
plementing a new performance management system that was designed to ensure ef-
fective employee feedback, performance coaching, recognition, and communication of
47
performance expectations. This increased emphasis on managing performance rein-
forces continuous improvement aligned with obtaining mission results.
Using the tools provided to us by Congress, FAA has become a more accountable
and performance-based work culture by designing and implementing human capital
best practices that meet our business needs. We successfully implemented key
human capital initiatives in staffing, compensation, performance management and
executive systems for our large 50,000 member mostly technical workforce that is
highly unionized, deployed globally, and operated in a business environment driven
by dynamic change.
Question 5. The DOT Inspector General recently noted that: Cost control must
become an imperative for FAA, which has not been the case for some time. What
can you do, and what can we do to help you, change the culture of the FAA to make
cost control imperative?
Answer. FAAs Management Team is now completing a new Strategic Plan. One
of the four goal areas is Organizational Excellence which has as one of its three
objectives to Deliver services to our customers while controlling costs. A key initia-
tive is to develop and implement an agency-wide cost control program using data
from the Cost Accounting and Labor Distribution Reporting systems. The creation
of this objective and the associated cost control program signals a major cultural
shift in the FAA, which underscores my personal commitment to control costs.
Question 6. The Inspector General (OIG) also noted that five major acquisitions
out of 20 that the OIG tracks have experienced substantial cost growth totaling
more than $3 billion (from $2.8 billion to $5 billion), which is equivalent to an entire
years budget for FAAs modernization account. Also, these same five acquisitions
have experienced schedule slips of 3 to 5 years. What can we do in this area?
Answer. The FAA is working to improve methods for controlling the growth of
baselines for major programs. We have changed our process to allow for additional
time to develop accurate cost and schedule estimates prior to award of a contract.
This has resulted in more stable baselines. In addition, the FAA has identified its
highest priority programs in order to ensure that resources are made available as
required to complete development of planned capabilities as scheduled.
The FAA has incorporated a series of management control processes and tools
that will improve the tracking and reporting of costs, management of schedules, and
the technical performance on major acquisition programs. We are also implementing
core management training with the objective of obtaining program management cer-
tification for our executives, project managers, and supervisors.
Data is collected and analyzed on a monthly basis and incorporated into the agen-
cys decision process for managing program tasks and goals. Senior level managers
are provided detailed program performance status through periodic Acquisition Pro-
gram Reviews, reports, and briefings.
Question 7. Do you have any progress to report in the hiring of a Chief Operating
Officer (COO) for the air traffic control system? What is you timeframe for having
a COO on board?
Answer. As you know, the search for the right candidate to fill this important po-
sition has been one of Secretary Minetas and my top priorities, and we have found
that person. Recently, we selected Russell G. Chew to serve as Chief Operating Offi-
cer for the performance-based Air Traffic Organization (ATO) within the FAA. I am
delighted to have someone of his caliber join our team.
Mr. Chew has nearly two decades of broad aviation industry experience including
service on many aviation industry committees in support of national airspace mod-
ernization as well as his work for a major airline. Mr. Chew will report for duty
August 1, 2003.
Question 8. The airline industry is fundamentally restructuring itself due to the
economic crisis it is facing. Some airlines are changing how they are operatefor
example, some are increasing reliance on regional jets or are increasing point to
point service, rather than using hubs. These changes will affect how and where air
traffic will occur. What is the FAA doing to adapt to this reshaped industry?
Answer. It is clear that this is a critical time for the aviation industry, as they
cope with issues of terrorism, war, disease, and overall economic conditions. Air car-
rier activity levelsboth enplanements and operationsare well below those of
2000. We currently forecast that it will take until 2005 or 2006 for industry to re-
gain those highs.
While the industry is restructuring, it is not yet clear exactly what forms will
emerge. However, we are confident that growth will resume and recognize a need
to make certain that sufficient capacity will exist to serve resumed demand, even
as it takes new form. To help industry rebound from its current financial difficulty,
48
I am asking FAA executives to identify and pursue items to help improve efficiency
as soon as possiblean expedited OEP.
Question 9. How has the FAA responded to the Canadian Transportation Safety
Boards findings that indicates that the FAAs oversight of its third party certifi-
cation program (Designated Alteration Station) failed to identify and correct anoma-
lies that existed in the design and integration of a non-essential system on the
MD11 involved in the September 2, 1998 tragedy of Swissair Flight 111 which de-
parted from New York, on route to Geneva, Switzerland, with 215 passengers and
14 crew members on board?
Answer. The FAA has taken steps to ensure that its certification personnel are
aware of the potential hazards introduced by non-essential systems, especially those
that might affect power load-shedding procedures during an emergency. In Sep-
tember 2000, the FAA issued policy requiring that flight crews have a means to
manually remove power from such in-flight entertainment systems. Additionally,
the FAA is considering new regulations that require circuit breakers not be used
as the primary means to remove or reset system power.
The FAA has incorporated guidance in its policy addressing Designated Alteration
Station (DAS) programs that require:
a DAS to consider aircraft manufacturer design philosophies during the sup-
plemental type certification (STC) process;
a DAS to determine that they have appropriate knowledge and experience
prior to performing the STC;
FAA to assess the DASs knowledge and experience relative to these issues
prior to delegating the program; and
in-house DAS training to highlight the importance of these considerations in
the STC process.
Question 10. How does the FAA verify that non-essential system electrical re-
quirements are not on the same electrical cabin buses as essential flight control
systems?
Answer. The current transport category airworthiness requirements do not pro-
hibit non-essential electrical system loads to be connected to an essential loads
electrical bus. However, the regulations require that non-essential loads not inter-
fere with operation of essential systems during normal operations and failure condi-
tions.
The FAA has published policy regarding the connection of non-essential cabin
equipment to the same electrical buses as essential systems. These policies are
available to the public. While not legally binding, the policies are used by Aircraft
Certification Offices and designees as part of the normal certification process, when
reviewing proposed electrical system designs, to ensure compliance with applicable
airworthiness regulations.
In addition, FAA has drafted nearly two dozen new and revised aircraft certifi-
cation regulations that specifically address aircraft wiring issues. Aviation industry
wiring experts and foreign aircraft certification authorities have participated in this
process. Some of the proposed requirements are power switches for non-essential
equipment, improved wire separation criteria, and a wire system safety analysis.
Question 11. Currently, the FAA requires cockpit voice recorders to have a 30-
minute recording duration for transport category aircraft. However, the inter-
national joint aviation requirements require that airline transport category aircraft
be equipped with two-hour CVR recording capability. Are there any plans to require
that U.S. planes are equipped with two-hour CVR capability?
Answer. The FAA is finalizing a notice of proposed rulemaking to address Na-
tional Transportation Safety Board recommendation A9917 regarding the manda-
tory equipage of 2-hour cockpit voice recorders. Currently, the proposed language is
in executive-level coordination.
Question 12. What aircraft certification standards currently exist regarding mate-
rial flammability that are pertinent to the Swissair Flight 111 case? Are there any
changes planned as a result of this crash?
Answer. The pertinent regulation that covers the certification standards for pas-
senger cabin and cargo compartment flammability is 14 CFR 25.853, Compartment
Interiors. This regulation describes the specific areas and items within the compart-
ments occupied by crew or passengers that must meet FAA flammability tests ar-
ticulated in Appendix F to Part 25.
As a direct result of the crash of Swissair Flight 111, the metalized
polyethyleneterephthalate (MPET or metalized Mylar) cover material used on the
thermal acoustic insulation blankets was ordered removed from the fleet. Only the
49
MD80/90, MD11 and ATR42/72 models were found to use the MPET insulation.
The Airworthiness Directives (AD) ordering the removal of this material from serv-
ice went into effect for the MD80/90 and DC10/MD11 models on June 30, 2000.
The AD that applies to the Aerospatiale Model ATR42500 and Model ATR72 se-
ries airplanes became effective on May 27, 2003. The compliance time for each of
these ADs is five years.
In addition to the AD activities, the FAA initiated a rulemaking project to provide
for overall improved flammability standards for thermal acoustic insulation. A no-
tice of proposed rulemaking was issued and a final rule is now undergoing review
at FAA. The proposed rule would require that thermal acoustic insulation blankets
pass a new radiant panel test developed by the FAA Technical Center. The radiant
panel test measures a materials tendency to propagate a fire, addressing in-flight
fire concerns. In addition, insulation installed in the lower half of the airplane fuse-
lage would have to pass a new test method utilizing a high flow kerosene burner.
This test simulates a post crash fire scenario and measures the ability of the insula-
tion to resist penetration of a fire into the cabin, which extends the time for survival
and evacuation in an accident.
The FAA (through the Technical Center) is also partnering with industry in a
number of research projects aimed at further addressing the inflight fire threat from
fires in inaccessible areas. These efforts involve research regarding wire insulation,
contamination of hidden materials, the feasibility of utilizing active fire protection
systems in inaccessible areas, and techniques for finding and accessing fires in inac-
cessible areas in current designs. For this last example, FAA equipped both wide
and narrow body aircraft and has initiated testing.
The means of addressing fire in inaccessible areas is considered a combination of
materials fire safety, fire detection, and fire suppression. The design solutions may
vary; an approved installation for one airplane model may not be appropriate for
another model. As we further understand the various conditions and issues, the
FAA will modify our safety standards accordingly.
Aerospace Questions
Question 1. Can you update the Committee on your efforts to develop new safety
regulations for the commercial space launches operation at the Air Force launch
ranges?
Answer. The purpose of the Final Rule Governing Licensing and Safety Require-
ments for Launch is to develop a well-defined process for meeting the FAAs public
safety responsibilities with respect to the operation of commercial space launch vehi-
cles from both Federal and non-Federal launch sites. This effort was initiated in a
Notice of Proposed Rulemaking (NPRM), published in October 2000, and followed
by a Supplemental Notice of Proposed Rulemaking (SNPRM) in July 2002.
The Supplemental Notice of Proposed Rulemaking addressed changes to the Octo-
ber 2000 NPRM in the areas of grandfathering, risk limit for each hazard, and de-
bris thresholds for use in flight safety analyses. The SNPRM also addressed issues
of concern to commenters, specifically: (1) cost impacts on licensed launches from
Federal launch ranges; and (2) the FAA and Air Force process for relief from com-
mon launch safety requirements.
Based on the commercial launch industrys response to the SNPRM, FAA has
elected to publish a second SNPRM in September 2003. In this second SNPRM, FAA
seeks to better articulate current practice; address comments to the NPRM that are
not addressed in the first SNPRM; and close the cost gaps between the FAA and
the commercial launch industry. These objectives can be synthesized into four fun-
damental areas: (1) capturing current practice; (2) removing ambiguities; (3) ad-
dressing implementation costs; and, (4) maintaining flexible approaches to space
launch.
Question 2. In light of the current situation in the commercial space industry, do
you foresee any commercial development of re-useable launch vehicles in the near
future? What regulations will be needed to facilitate the launching of these types
of vehicles?
Answer. A number of private or commercial companies are planning or in the
process of developing reusable launch vehicles (RLVs). Many of these companies
have shifted their focus toward suborbital market opportunities where the technical
challenges and cost to develop a suborbital RLV are less compared to an orbital
RLV. As discussed in a report entitled Suborbital Reusable Launch Vehicles and
Applicable Markets, published by the U.S. Department of Commerces Office of
Space Commercialization, there are a number of current and emerging suborbital
markets, which include military surveillance, commercial/civil earth imagery, fast
package delivery, high speed passenger transportation, media, advertising, sponsor-
ship, and space tourism. The $10 million X PRIZE competition, which was created
50
to jump start the space tourism industry, also serves as a catalyst for the suborbital
commercial space transportation industry. It is our understanding that the X PRIZE
Foundation anticipates that three U.S. teams will attempt launches before January
1, 2005.
The FAA issued regulations to ensure protection of the uninvolved public in the
event of RLV launch and reentry activities. These regulations, however, do not spe-
cifically address passenger and crew safety. The challenge facing the FAA is to bal-
ance the need for regulations to protect public safety and property while not over-
burdening or stifling a fledgling commercial RLV industry, which proposes to carry
humans on board commercial RLVs. The FAA is identifying, researching, and evalu-
ating issues that might have a bearing on future FAA requirements associated with
the safety and transport of humans on commercial RLVs. Standards or regulations
that are developed for commercial human space flight will influence the develop-
ment of the commercial RLV industry in terms of vehicle design, operations, and
risk management. It is envisioned that vehicle safety standards for safety critical
systems, operations and maintenance (O&M) standards, verification standards and
human safety standards (e.g., RLV crew qualification, training, and health require-
ments), as well as additional regulations concerning the operation of reentry sites
may be developed in the future.
Question 3. The tragic accident resulting in the loss of the Space Shuttle Colum-
bia and its crew focuses new attention on the risks and danger of space activity.
How does this impact the safety responsibilities of the FAA in this area?
Answer. The safety responsibilities of the FAA are not changed, however there is
an emphasis on the risks associated with reentry activities. The FAA is closely fol-
lowing the Space Shuttle Columbia accident investigation and is participating in the
accident investigation process. The FAA will assess the adequacy of current debris
models used for determining overflight risk to the public, including risk to aircraft
that might be flying within the debris area. Further, the Columbia accident inves-
tigation is expected to provide insight into maintenance and test procedures, par-
ticularly applicable to reusable launch vehicles. The FAA will make use of these les-
sons learned in developing guidance and requirements for maintenance of reusable
launch vehicles.
Question 3a. What impact does the Space Shuttle Columbia accident have on the
ability of commercial launch companies to obtain liability insurance?
Answer. The FAA contacted a number of insurance brokers specializing in avia-
tion and space insurance. It would appear that the tragic loss of Columbia has no
direct effect on the ability of commercial launch operators to obtain liability insur-
ance in satisfaction of FAA license requirements although, the full effects of the ac-
cident may not be revealed until annual insurance programs maintained by FAA
launch licensees are renewed. However, the loss of Columbia contributes to the per-
ception growing among underwriters and re-insurers since the events of September
11, 2001, that insuring space risk, including launch liability, is undesirable busi-
ness. Increasing unwillingness of re-insurers to accept space-related risks may limit
the availability of launch liability insurance and also increase insurance costs.
Question 3b. What steps are being taken taking to capitalize on any lessons
learned from the Space Shuttle Columbia accident investigation?
Answer. A member of the FAA Office of Commercial Space Transportation staff
is working with the Space Shuttle Columbia Accident Investigation Board. Through
this effort, FAA will be able to capitalize on lessons learned by obtaining first hand
knowledge of all the particular issues. One area for which the Space Shuttle Colum-
bia accident will provide insight is the adequacy of current debris risk models. Vehi-
cle breakup, including the characteristics (i.e., the number of pieces, and their sizes
and shapes) is a complex and difficult phenomenon to model. The FAA is examining
the issue of debris survivability for high speed reentries.
Question 4. The Commercial Space Launch Act specifies that the Secretary of
Transportation shall encourage, facilitate and promote commercial space launches
and reentries by the private sector and facilitate private sector involvement in com-
mercial space transportation activity. How are you working with the Office of Space
Commercialization at the Department of Commerce to fulfill this mission?
Answer. The FAA has worked closely with the Office of Space Commercialization
at the Department of Commerce (DOC). Both FAA and DOC share data on new
launch developments, encourage and facilitate the implementation of space policies
which are favorable to commercial space launch sites and operators, and work on
interagency groups which facilitate and promote the commercial space launch indus-
try.
Specifically, FAA worked with DOC on the recently completed Liability Risk-Shar-
ing Regime for U.S. Commercial Space Transportation. We have worked together on
51
the analysis of trade agreements and the impact on the U.S. commercial launch in-
dustry. We have discussed with the DOCs Office of Space Commercialization the
needs of the commercial launch industry as described by our Commercial Space
Transportation Advisory Committee (COMSTAC).
A representative of the DOCs Office of Space Commercialization was a member
of a FAA Forecast Conference Panel this past October. More recently, we worked
with the Office of Space Commercialization on the Policy Coordinating Committee
established by the National Security Council during discussions on the Space Trans-
portation Policy.
In addition, the FAA has participated in a seminar developed by the DOCs Office
of Space Commercialization on improving the data systems used for space transpor-
tation policy issues and provided data to DOC in support of their publications. Fi-
nally, we have worked together in the development of a Memorandum of Agreement
between the DOC, the FAA, and the Department of the Air Force on a Spacelift
Range Commercial Requirements Process. This process is defined as a formal, re-
peatable process for collecting commercial sector range support and modernization
requirements, communicating these requirements to the Air Force, and considering
these requirements in the existing Air Force requirements process.
Question 5. The U.S. commercial space launch industry operates under a risk-
sharing arrangement with the Federal Government, commonly known as the in-
demnification provision. This program is scheduled to sunset at the end of 2004.
Are there any recent circumstances that have affected the necessity for this program
since the FAA issued its report last year?
Answer. The U.S. commercial space launch industry continues to demonstrate a
solid safety track record and there has been no event requiring implementation of
statutory indemnification provisions. However, a number of insurance market-driv-
en factors, outlined below, are coalescing at a time of decreased commercial launch
demand and heightened price sensitivity, reinforcing the findings set forth in the
FAA report, Liability Risk-Sharing Regime for U.S. Commercial Space Transpor-
tation: Study and Analysis (FAA Liability Study), that the existing risk allocation
regime is adequate, proper, and effective, as well as necessary to maintain a near-
level playing field with foreign competitors.
The FAA Liability Study includes an evaluation of the effects of September 11,
2001, on the commercial space transportation insurance market. The report noted
the increasing reluctance of underwriters and re-insurers to participate in aerospace
risks after September 11, reflecting a re-evaluation of space risk in general. Their
participation in space risk is critical to this market segment. Insurance market reac-
tions have continued to evolve in this direction and difficulties in insuring space risk
in general have increased due to recent satellite failures while in orbit, in addition
to the overall reduction in the aviation liability insurance market following Sep-
tember 11. Although space insurance covering satellite assets is different from
launch liability coverage, the FAA is advised that it is becoming increasingly dif-
ficult and costly to cover any aerospace risk, including launch liability.
Because of the decline in demand for worldwide commercial launch services since
1999, competition between international launch providers is fierce and prices have
dropped. Further increases in the cost to do business would seriously hurt U.S. com-
petitiveness. Foreign launch providers receive indemnification support from their
governments. U.S. industry has already indicated paying the expense of indem-
nification would not allow them to stay in business. This would hold true even
under the best market conditions.
At its October 2002 meeting, the Commercial Space Transportation Advisory
Committee (COMSTAC) adopted a report effectively endorsing the FAA Liability
Studys analysis of the issues and most notably its assessment that maintaining the
current liability risk-sharing regime is the only option that achieves four out of the
five objectives delineated by the FAA in the study. In forwarding its report, the
COMSTAC Chairman stated that continuation of this regime is critical to the via-
bility and global competitiveness of U.S. space launch providers, whichalong with
their subcontractors and suppliersprovide assured access to space for military,
civil as well as commercial missions. (Letter from Livingston L. Holder, Jr., Chair-
man, COMSTAC, to Patricia Grace Smith, February 10, 2003.)
COMSTAC also recommended amending the Commercial Space Launch Act
(CSLA) by eliminating the sunset provision applicable to indemnification authority
or, alternatively, by extending the indemnification authority for 10 years.
Additional developments since the issuance of the FAA Liability Study include the
following measures to address potential catastrophic risks:
Congress enacted legislation providing Government support in the event of cata-
strophic terrorism-related claims.
52
The FAA continues to provide war risk coverage for commercial airlines. Section
201 of the Air Transportation Safety and System Stabilization Act, limiting air
carrier liability to $100 million for third-party claims arising out of an act of
terrorism, as determined by the Secretary of Transportation, has been extended
and continues in effect.
In 2002, Congress enacted the Support Anti-terrorism by Fostering Effective
Technologies Act of 2002, or the SAFETY Act, which provides a risk manage-
ment system for designated anti-terrorism technologies that meet certain cri-
teria. The criteria include the existence of extraordinarily large or extraor-
dinarily unquantifiable potential third party liability risk exposure to the pro-
vider of the technology. (SAFETY Act, Section 862). To be eligible for the bene-
fits of the SAFETY Act risk management system, the Seller must, among other
things, obtain liability insurance that does not exceed the maximum available
on the world market at prices and terms that will not unreasonably distort the
sales price for the technology and enter into reciprocal waivers of claims among
Sellers, contractors and customers, among others. The benefits of the SAFETY
Act include a provision limiting the Sellers liability arising out of, relating to,
or resulting from an act of terrorism to the amount of liability insurance re-
quired under the SAFETY Act. (SAFETY Act, Section 864.)
Question 6. The global telecommunications industry and its related space launch
component has been in a slump the last few years. How has this slump affected
the activities of the FAA and its future plans?
Answer. The commercial launch market does not necessarily impact FAA activity.
In fact, new private sector efforts as well as Federal and State funded space trans-
portation programs have not been deterred by changes in the telecommunications
marketplace.
FAA activities include launch and reentry licenses, launch site and reentry site
operator licenses, regulatory development, and policy development. Currently there
are 13 active launch licenses. A number of organizations are seeking new launch
and reentry licenses and FAA works with these companies in a pre-application proc-
ess that includes reviews of safety, payloads, policy and environmental impacts.
Furthermore, expendable launch vehicle (ELV) and reusable launch vehicle (RLV)
companies continue development efforts with one brand new ELV expected to
launch in 2003.
In addition to four active launch site licenses held by state entities in Alaska,
California, Florida, and Virginia, ten additional states are proposing launch sites for
future commercial space transportation activities (Alabama, Montana, Nevada, New
Mexico, Oklahoma, South Dakota, Texas, Utah, Washington, and Wisconsin).
As industry advances new space transportation capabilities, the regulatory frame-
work must expand and adapt to create the best possible framework to grow the in-
dustry while maintaining safety standards. FAA has issued advisory circulars and
other guidance documents to aid the industry in understanding regulations and re-
quirements for new expendable and reusable launch vehicles. When developing reg-
ulations, FAA also prepares economic impact analyses as part of the Paperwork Re-
duction Act. FAA has been contacted by congressional offices urging increasing lev-
els of support for newly emerging companies in space transportation.
To stay in touch with the needs and concerns of the industry, FAA works with
its Commercial Space Transportation Advisory Committee (COMSTAC), a group
comprised of representatives of industry and related interests. In addition, FAA par-
ticipates in future space launch bases and range technology studies and works on
the development of requirements and regulations for RLV Operations and Mainte-
nance (O&M). Several annual publications each year assist industry in assessments
of the market and help promote their activities. FAA also works closely with the
White House on the review of the National Space Transportation Policy and partici-
pates in interagency discussions on policy and trade issues.
Question 7. Before the Space Shuttle Columbia accident, there was a lot of discus-
sion about commercial space tourism being a field with economic potential. Based
upon interface with the commercial industry, what fields do you believe have the
greatest potential for economic growth?
Answer. There are a number of areas that have been enabled by commercial space
launch activities and space tourism is often cited as a future growth area. The con-
tinued growth of satellite applications in the areas of remote sensing, communica-
tions (Direct to Home or Direct Access Radio) and navigation will also grow as new
applications are developed.
Public Space Travel continues to be the most promising market for new growth
in the commercial space transportation industry. Interest in space tourism has not
53
waned since Shuttle Columbia. Proponents believe that the market is real, even at
very high prices, and only awaits the proper launch vehicle.
The X PRIZE competition is a $10 million prize competition that was created to
jump start the space tourism industry. If one of the competitors is successful and
continues to operate as a commercial launch activity carrying passengers to the edge
of space, there are business plans which will marry the launch with commercial as-
tronaut training and marketing companies, poised to advertise the availability of
this type of adventure travel.
Other new applications that could open up new markets include expansion of
broadband capabilities such as delivery of the Internet, digital motion pictures or
other information requiring high bandwidth. Advertising and commercial product
sponsorships could show some limited opportunities. There could be new markets
for in-space transportation services such as fuel, power, or other supplies for the
International Space Station or extending a satellites lifespan.
RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. ERNEST F. HOLLINGS TO

MARION C. BLAKEY
Question 1. How has the FAA responded to the Canadian Transportation Safety
Boards findings that indicates that the FAAS oversight of its third party certifi-
cation program (Designated Alteration Station) failed to identify and correct anoma-
lies that existed in the design and integration of a non-essential system on the
MD11 involved in the September 2, 1998 tragedy of Swissair Flight 111 which de-
parted from New York, on route to Geneva, Switzerland, with 215 passengers and
14 crew members on board?
Answer. The FAA has taken steps to ensure that its certification personnel are
aware of the potential hazards introduced by non-essential systems, especially those
that might affect power load-shedding procedures during an emergency. In Sep-
tember 2000, the FAA issued policy requiring that flight crews have a means to
manually remove power from such in-flight entertainment systems. Additionally,
the FAA is considering new regulations that require circuit breakers not be used
as the primary means to remove or reset system power.
The FAA has incorporated guidance in its policy addressing Designated Alteration
Station (DAS) programs that requires:
a DAS to consider aircraft manufacturer design philosophies during the sup-
plemental type certification (STC) process;
a DAS to determine that they have appropriate knowledge and experience
prior to performing the STC;
FAA to assess the DASs knowledge and experience relative to these issues
prior to delegating the program; and
in-house DAS training to highlight the importance of these considerations in
the STC process.
Question 2. How does the FAA verify that non-essential system electrical re-
quirements are not on the same electrical cabin buses as essential flight control
systems?
Answer. The current transport category airworthiness requirements do not pro-
hibit non-essential electrical system loads to be connected to an essential loads
electrical bus. However, the regulations require that non-essential loads not inter-
fere with operation of essential systems during normal operations and failure condi-
tions.
The FAA has published policy regarding the connection of non-essential cabin
equipment to the same electrical buses as essential systems. These policies are
available to the public. While not legally binding, the policies are used by Aircraft
Certification Offices and designees as part of the normal certification process, when
reviewing proposed electrical system designs, to ensure compliance with applicable
airworthiness regulations.
In addition, FAA has drafted nearly two dozen new and revised aircraft certifi-
cation regulations that specifically address aircraft wiring issues. Aviation industry
wiring experts and foreign aircraft certification authorities have participated in this
process. Some of the proposed requirements are power switches for non-essential
equipment, improved wire separation criteria, and a wire system safety analysis.
Question 3. Currently, the FAA requires cockpit voice recorders to have a 30-
minute recording duration for transport category aircraft. However, the inter-
national joint aviation requirements require that airline transport category aircraft
54
be equipped with two-hour CVR recording capability. Are there any plans to require
that U.S. planes are equipped with two-hour CVR capability?
Answer. The FAA is finalizing a notice of proposed rulemaking to address Na-
tional Transportation Safety Board recommendation A9917 regarding the manda-
tory equipage of 2-hour cockpit voice recorders. Currently, the proposed language is
in executive-level coordination.
Question 4. What aircraft certification standards currently exist regarding mate-
rial flammability that are pertinent to the Swissair Flight 111 case? Are there any
changes planned as a result of this crash?
Answer. The pertinent regulation that covers the certification standards for pas-
senger cabin and cargo compartment flammability is 14 CFR 25.853, Compartment
Interiors. This regulation describes the specific areas and items within the compart-
ments occupied by crew or passengers that must meet FAA flammability tests ar-
ticulated in Appendix F to Part 25.
As a direct result of the crash of Swissair Flight 111, the metalized
polyethyleneterephthalate (MPET or metalized Mylar) cover material used on the
thermal acoustic insulation blankets was ordered removed from the fleet. Only the
MD8O/90, MD11 and ATR42/72 models were found to use the MPET insulation.
The Airworthiness Directives (AD) ordering the removal of this material from serv-
ice went into effect for the MID80/90 and DC10/MD11 models on June 30, 2000.
The AD that applies to the Aerospatiale Model ATR42500 and Model ATR72 se-
ries airplanes became effective on May 27, 2003. The compliance time for each of
these ADs is five years.
In addition to the AD activities, the FAA initiated a rulemaking project to provide
for overall improved flammability standards for thermal acoustic insulation. A no-
tice of proposed rulemaking was issued and a final rule is now undergoing review
at FAA. The proposed rule would require that thermal acoustic insulation blankets
pass a new radiant panel test developed by the FAA Technical Center. The radiant
panel test measures a materials tendency to propagate a fire, addressing in-flight
fire concerns. In addition, insulation installed in the lower half of the airplane fuse-
lage would have to pass a new test method utilizing a high flow kerosene burner.
This test simulates a post crash fire scenario and measures the ability of the insula-
tion to resist penetration of a fire into the cabin, which extends the time for survival
and evacuation in an accident.
The FAA (through the Technical Center) is also partnering with industry in a
number of research projects aimed at further addressing the inflight fire threat from
fires in inaccessible areas. These efforts involve research regarding wire insulation,
contamination of hidden materials, the feasibility of utilizing active fire protection
systems in inaccessible areas, and techniques for finding and accessing fires in inac-
cessible areas in current designs. For this last example, FAA equipped both wide
and narrow body aircraft and has initiated testing.
The means of addressing fire in inaccessible areas is considered a combination of
materials fire safety, fire detection, and fire suppression. The design solutions may
vary; an approved installation for one airplane model may not be appropriate for
another model. As we further understand the various conditions and issues, the
FAA will modify our safety standards accordingly.
RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. DANIEL K. INOUYE TO

MARION C. BLAKEY
Question 1. In the Presidents recent budget submission, changes were proposed
to the Essential Air Service Program. This is an important program for several com-
munities in my State. Could you please explain the proposed changes and the pos-
sible effect on the communities that currently receive service?
Answer. We are proposing a fundamental change in the way that the Government
delivers transportation services to rural America. For too long, many communities
there are a few exceptionshave taken the air service for granted as an entitlement
and done little or nothing to help make the service successful. Requiring a modest
contribution should energize civic officials and business leaders at the local and
State levels to encourage use of the service. Communities will also have many more
service options available to them. Rather than the two or three round trips a day
to one hub that EAS has traditionally provided, we would work with the commu-
nities and state departments of transportation to procure charter service, single-en-
gine, single-pilot service, regionalized service, or ground transportation in cases
where that seemed to be more responsive to their needs. Moreover, as stakeholders
in their service, the communities will become key architects in designing their spe-
cific transportation package. For the most isolated communities, we would continue
55
to subsidize air service to the extent of 90 percent of the total subsidy required. The
remaining communities would have to contribute 25 percent of the total subsidy re-
quired.
In determining a communitys standing in the program, we would incorporate the
distance from small hub airports in addition to the distance to medium and large
hubs. Some EAS communities are very close to small hubs but maintain their stand-
ing in the program because the nearby airport does not meet the medium-hub
threshold.
Question 2. I am concerned that some of the communities that would be required
to pay 10 to 25 percent of the federal subsidy level would be unable to fund the
match requirement and may lose service. In Hawaii, we have a very small commu-
nity of Hansens disease patients living in a remote area with no surface transpor-
tation links. Kalaupapa is currently served by EAS and under your current proposal
would be required to provide $51,000 to continue service. Should Kalaupapa not be
able to fund the matching requirement, it could have devastating effects on the
members of the community requiring medical attention who would not have access
to our States medical providers without this air service. Would communities that
cannot raise the necessary funds become isolated from our national air transpor-
tation system, regardless of the needs of that community?
Answer. Communities that are not able to raise the necessary funds would not
automatically be cut off from the national air transportation. We would take into
account geographic isolation, with particular deference to communities that have no
access to the national transportation system other than by air, such as islands or,
in this case, Kalaupapa. We would certainly be willing to work with you on any
needs unique to Hawaii.
In the broader context of your question, we would also like to emphasize that the
funds do not need to come from the community exclusively, or even at all, but can
come from a variety of sources, both public and private. In fact, we encourage state-
wide participation by a variety of state agencies, including, of course, state depart-
ments of transportation. Communities could also look to their chambers of com-
merce for additional support.
Question 3. The Airport Improvement Program was created to maintain and de-
velop airport facilities. Prior to September 11, security projects accounted for an av-
erage of 2 percent of the total AIP grant program. Although aviation security was
transferred to the new Transportation Security Administration, in the last Fiscal
Year more than 16 percent of the AIP grants were used for security projects. De-
spite FAAs projected growth in the national air transportation system, the Adminis-
tration has proposed level funding for the AIP program. Do you plan to submit a
proposal to protect the AIP program from further use for security projects to ensure
that the needed capacity building projects are completed?
Answer. AIP has always funded security projects at airports, although before FY
2002, security projects on average made up a low percentage of AIP expenditures.
In FY 2002, in response to the unprecedented new security requirements imposed
on airports after September 11, AIP spending on security rose to unprecedented lev-
els representing almost 17 percent of AIP. The FAA anticipates comparable levels
of AIP funding for security in FY 2003, with spending being driven by the cost of
terminal modification and reconfiguration to accommodate in-line installation of ex-
plosive detection systems for checked-baggage. The Aviation and Transportation Se-
curity Act made this work AIP eligible and the transfer of aviation security respon-
sibilities to TSA did not otherwise narrow AIP eligibility for security funding.
The FAA does not at this time anticipate continuation of these unprecedented lev-
els of AIP funding for security projects beyond FY 2003, however, our reauthoriza-
tion proposal does not include any provisions to limit the availability of AIP funds
for security.
Question 4. As you know, more than $560 million in AIP was used for security-
related expenses in Fiscal Year 2002, up from only $57 million the previous year.
Last week, TSA Under Secretary James Loy testified that the TSA would like to
have one more bite at the apple in Fiscal Year 2003 to use AIP for high priority
security projects.
What effect has the use of the $560 million in AIP in FY02 had on other safety-
and capacity-related airport improvement projects?
What is your view on the use of AIP funds for even more security costs in
FY03?
What affect would the use of AIP at FY02 levels have on other projects in
FY03?
56
Long-term, what is your view on the use of AIP funds for security-related
projects?
Answer. Despite record levels of AIP expenditures in FY 2002 to help airports
meet new security requirements imposed in the wake of the terrorist attacks of Sep-
tember 11, the FAA was able to fund all safety projects, including runway safety
areas and runway safety action team recommendations; letter of intent commit-
ments; noise mitigation and reduction projects, ongoing phased projects; and con-
gressional earmarks. The LOIs and phased projects represent commitment of signifi-
cant AIP resources to capacity projects. The FAA also provided substantial AIP
funding for rehabilitation projects, though there was a reduction in reconstruction
and standards projects.
Working collaboratively with TSA and the Department of Transportation, the
FAA has committed to make a comparable level of AIP funding available for secu-
rity projects in FY 2003with a significant share going toward terminal modifica-
tion and reconfiguration costs associated with in-line EDS deployment. These costs
were made eligible for AIP funding for the first time in the Aviation and Transpor-
tation Security Act. We are confident that the system can sustain this level of AIP
support for security for one more year without compromising other national objec-
tives in building and sustaining this nations system of airports.
The FAA does not anticipate that the unprecedented level of security needs will
be sustained on a continuous basis, once deployment of explosive detection systems
for check baggage is fully implemented. Therefore, we do not anticipate that this
tension will be sustained on a long-term basis. In the mean time, the FAA will con-
tinue to work closely with the Secretary of Transportation, the TSA and this com-
mittee to assure that the appropriate balance is struck between funding for security
and other national priorities.
Question 5. The Administration in its FY 2004 budget proposes to fund AIP at
$3.4 billion for the foreseeable future. Airports have stated that capital needs top
$16 billion annually for the foreseeable future. Can we meet ongoing safety, secu-
rity, capacity and noise-abatement needs into the future with AIP funded at only
$3.4 billion?
Answer. The Administrations proposal would continue the dramatic increase in
AIP initiated by the passage of AIR21. A $3.4 billion AIP represents a 70 percent
increase in AIP from pre-AIR21 levels. We recommend shifting a greater percent-
age of those funds to those airports with the greatest financial need and highest de-
pendence on AIP funding for achieving capital requirements. We have also proposed
that a larger percentage of AIP be made available on a discretionary basis to enable
the FAA to direct these funds to safety, security and capacity projects of national
significance. We have also proposed an increase in the noise set aside. We believe
that by retaining the robust AIR21 level of AIP, in combination with these formula
changes, we can best meet airport capital needs before us.
Question 6. In its budget request, the Administration proposes a major spend
down of the Airport and Airways Trust Fund over the next several years. How
would the spend down of the Trust Fund affect capital programs like AIP?
Answer. We remain committed to using the AATF only to fund the Departments
aviation programs, but in a change from AIR21, the Administration is proposing
to increase our use of balances that have built up in the Trust Fund.
The Administrations spend down proposal does not impact capital programs.
These programs are maintained at comparable levels to those provided under AIR
21.
Under our budget and reauthorization proposals, we are projecting an uncommit-
ted balance of just over $1.1 billion at the end of FY 2007. This balance would be
down from a $4.8 billion uncommitted balance at the end of FY 2002.
FY 2004 Funding ($ in millions)

FAA Account Under AIR21 formula Under FY04 Pres. Bud.
Facilities & Equipment 2,916 2,916

Grants-in-Aid for Airports 3,400 3,400
Research, Engineering & Development 100 100
Operations (Trust Fund) 4,511 6,000
Operations (General Fund) 3,080 1,591
Total 14,007 14,007
57
Question 7. The FAA has made a concerted effort in recent years to streamline
the review and approval process for key capacity-related projects. What is the status
of those efforts?
Answer. FAA issued a Report to Congress in May 2001 reporting on Federal envi-
ronmental requirements related to the planning and approval of airport improve-
ment projects together with recommendations for streamlining the environmental
review process associated with those types of projects. Six initiatives for stream-
lining were identified and implemented, as outlined below.
1. FAA established EIS Teams for preparing EISs for major runway projects at
large hub primary airports. Since the Report to Congress in 2001, FAA Teams
have been working on the EISs for eight major runway projects (Atlanta, Bos-
ton, Chicago-OHare, Chicago South Suburban Airport (SSA), Cincinnati, Los
Angeles, Philadelphia, and San Francisco). EISs have been completed for four
of the projects (Atlanta, Boston, SSATier I, and Cincinnati) with the other four
in various stages of EIS preparation.
2. FAA has reallocated staff to provide for five more environmental specialist
positions in the Office of Airports. With the passage of the FY 2003 Department
of Transportation and related Agencies Appropriations Act, funding has been
provided for hiring 18 more Airports environmental specialists and 13 environ-
mental attorneys. These added personnel will specifically conduct and expedite
the environmental analysis and review of airport and aviation development so
as maximize the capacity benefits to the National Aviation System. FAA is un-
derway with plans to hire qualified personnel to fill these positions at various
locations around the country.
3. FAA continues to maximize the use of consultant resources to perform more
EIS tasks that can be delegated by the FAA.
4. FAA is working with the Council on Environmental Quality (CEQ) to expand
FAA list of categorical exclusions will be published in revisions to FAA environ-
mental orders. Initiatives are being explored to provide for shorten and stream-
lined EISs, as well as Environmental Assessments, that will also involve CEQ
and EPA.
5. FAA continues to engage other Federal agencies at the beginning and during
preparation of EISs about their environmental reviews and permit requirements
to avoid unnecessary delays. Also, the FAA, and the National Association of
State Aviation Officials, has undertaken a joint review of Federal and State en-
vironmental processes and coordination. As a result we have determined oppor-
tunities for improving ways in which Federal and individual State requirements
can be more effectively and efficiently combined and coordinated. FAA reviews
and updates the status of efforts on the latter initiative twice a year.
6. FAA has developed, published (on FAAs web site) and updates (at least twice
a year) a compendium of best practices for EIS preparation and management.
The compendium of best practices addresses practices that are the responsi-
bility of the airport proprietor, the EIS consultant, as well as those of the FAA.
Question 7a. How have they affected the time it takes to review key projects?
Answer. The 2001 Report to Congress noted the average time for completion of
an EIS (from start of the EIS until EIS approval) was 3 years. The average time
to issue an agency Record of Decision (ROD) was 3 months. Of the four runway EIS
completed since issuance of the 2001 Report to Congress, and implementation of
FAA streamlining initiatives, the Atlanta EIS took 2 years and 5 months to com-
plete. The Tier I EIS for the SSA took 1 year and 10 months and the Cincinnati
EIS took 3 years and 2 months to complete. For the Atlanta EIS, that is 7 months
less than the 3-year average; for the SSA EIS, 12 months less than the average;
and for the Cincinnati EIS, just 2 months more than the average. RODs for Atlanta,
SSA, and Cincinnati were prepared and issued in 112, 2, and 3 months respectively.
The Boston project was unique and controversial and, therefore, the EIS process
was long (almost 7 years). Adding to the process was an 18-month delay between
1996 and 1998 because of a change in Massport leadership and priorities, and ex-
traordinary steps taken to engage community groups and the public in the process.
The Boston EIS was not an average new runway EIS project in any sense of the
word. In the ongoing EIS projects, FAA streamlining initiatives are being utilized
to ensure that environmental process times are minimized to the maximum extent
possible, and hiring more environmental staff will greatly aid the effort.
Question 7b. Do you anticipate further administrative improvements in this area?
Answer. FAA hopes that further agency, as well as congressional actions, will lead
to administrative improvements in streamlining the environmental process for
58
major runway projects around the country. Besides the initiatives proposed as part
of the Administrations proposal for Aviation Reauthorization Legislation, FAA is
implementing the environmental streamlining provisions of Presidential Executive
Order (E.O.) 13274, Environmental Stewardship and Transportation Infrastructure
Project Review. Two airport EIS projects (Philadelphia and Los Angeles) have re-
cently been designated as priority projects for oversight under the E.O.
Question 7c. Do you support efforts in Congress to make further improvements
to the process?
Answer. Yes. The Administrations bill proposes a number of streamlining provi-
sions including
designation of aviation congestion projects and aviation safety projects for high
priority coordinated, concurrent reviews;
establishment of interagency Environmental Impact Statement teams;
deference to the Secretary on project purpose and need;
deference to the FAA on reasonable alternatives, aviation factors, and aviation
noise and emissions analyses;
funding of airport expansion noise mitigation from the noise set-aside without
an additional Part 150 process requirement;
elimination of the duplicative Governors air and water quality certification; and
judicial review.
Question 8. We are told that the Administration will soon unveil its FAA reau-
thorization proposal. Can you give us a preview of some of the key elements? Will
the Administration support the continuation of guaranteed funding for FAA capital
programs?
Answer. On March 25, 2003, the Administration transmitted its reauthorization
proposal, Flight100, to Congress.
Flight100 builds on the foundation of AIR21, by continuing our investment in
safety, air traffic control modernization and operations, airport capacity improve-
ments, and environmental stewardship. The key provisions of Flight100 include an
emphasis on smaller airports and projects of national significance. Therefore, the
Administration proposes a restructuring of the formulas and set-asides to allow
more funds to be targeted to those airports and projects with the greatest depend-
ence on Federal assistance. These airports are essential to the vitality of the NAS
and have limited funding options other than Federal assistance. We also recommend
simplifying the grant formulas by eliminating unnecessary or outdated set-asides.
I would also like to highlight our environmental concerns, a cornerstone of Flight
100. While FAAs primary mission is to ensure a safe and efficient NAS, we also
take our environmental responsibilities quite seriously. The environmental initia-
tives in Flight100 will contribute to continued success of our investment in safety
and capacity projects by providing for prompt and more effective environmental re-
view of significant projects while continuing to exercise strong environmental stew-
ardship.
The Administration also proposes new initiatives to mitigate the impacts of avia-
tion emissions and noise. For example, we propose to establish voluntary programs
to reduce aviation emissions by converting airport infrastructure, airport vehicles,
and airport-owned ground-support equipment to new low emission technologies. Our
noise initiatives include using some of the AIP noise set-aside for research aimed
at reducing community exposure to aircraft noise or emissions. We also hope to in-
crease prospective homebuyers awareness of areas near airports that are exposed
to aircraft noise by requiring Federal lenders to inform prospective homebuyers of
properties within airport noise contours.
Finally, Flight100 sets forth certain structural reforms that could assist agency
efforts to transform air traffic control and its supporting functions into an effective,
performance-based Air Traffic Organization. The structural reform provisions in our
reauthorization proposal would reinforce this goal by clarifying and enhancing man-
agement reforms that Congress has already put in place for the FAA.
Although the proposal does not extend the AIR21 provision of guaranteed fund-
ing by the Airport and Airway Trust Fund, the Presidents budget does propose to
spend not only interest and receipts accrued by the trust fund but also to increase
our use of balances that have built up in the fund.
Question 9. While service to smaller communities remains a high priority, the Ad-
ministration has proposed cuts to the Essential Air Service Program and has not
requested funding for the Small Community Air Service Development Program.
What is the Administration doing to promote air service to smaller communities?
59
Answer. The key issue here is responding effectively and efficiently to small com-
munities. It is important that changes be made to the Essential Air Service pro-
gram, regardless of the proposed or ultimate funding levels, to ensure that we pro-
vide the communities the maximum flexibility possible to address their air service
issues. A one size fits all approach has not proven to be very successful. Providing
communities more direct involvement and increased flexibility in meeting their indi-
vidual needs will better ensure that the Federal assistance available will provide
the communities with service that will be used.
It was not possible to provide Fiscal Year 2004 funding for the Small Community
Air Service Development Pilot Program as the program is currently authorized only
through Fiscal Year 2003. However, the Administrations Flight100 proposal in-
cludes a provision for small hubs and smaller airports to seek Federal assistance
to improve service at their communities. It differs from the current Pilot Program
in that it requires a contribution of 25 percent. It also eliminates the limitations
on the number of communities that can participate. The broad flexibility and the
grant structure have been retained.
RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. RON WYDEN TO

MARION C. BLAKEY
Question 1. Please discuss the status of FAA programs to install ASR11 or other
radar systems in areas that currently have no radar coverage. How many radar sys-
tems does FAA expect to be able to deploy over the next several years? What criteria
are used to set priorities for new radar installation?
Answer. The FAA has qualified 12-airport surveillance radar at locations that cur-
rently have no radar coverage. Installation activities have begun at four locations
and installations are scheduled to begin at four more within the next two fiscal
years. The FAA expects to deploy/commission 112 ASR11 systems through 2010.
The FAA considers actual and forecasted number of itinerant operations, aircraft
types, Instrument-Flight Rule (IFR) operations, expected delay savings, expected
coverage, coverage provided by other radar systems, existing navigation systems,
service to satellite airports, control facilities, and feeds to large terminal radar ap-
proach control facilities in its criteria to set priorities for new radar installations.
The FAA has met with the airport operators/authorities for some airports that may
not qualify for new radar, to consider alternatives to improve service.
Question 2. As you know, Congress has provided funding in each of the last three
years for the installation of Transponder Landing Systems (TLS) at a number of
small airports, including La Grande/Union County Airport in Oregon. These airports
stand to benefit significantly both economically and from a safety perspective once
these navigation aids are put in place. How is the TLS program proceeding? What
kind of progress is being made toward actually commissioning these systems at the
specific airports the congressional appropriators have named?
Answer. In December 2001, FAA type accepted Advanced Navigation & Posi-
tioning Corporations (ANPC) TLS, as a special (not for public use) Category I preci-
sion approach with siting and operational limitations. The limitations were nec-
essary in order to address risks associated with the systems unique technical char-
acteristics.
The completion of the TLS evaluation has taken longer than anticipated because
of a safety issue with the system that was identified in May 2002. During the execu-
tion of a TLS approach by an FAA flight inspection pilot, the TLS provided guidance
based upon the position of a nearby helicopter. The misleading guidance information
provided by the TLS was a safety hazard, because it could potentially result in con-
trolled flight into terrain. Therefore, on May 30, 2002, the FAA suspended the Type
Acceptance for TLS.
ANPC and FAA met in June 2002 to conduct problem analysis and to define the
strategy for fixing and testing the TLS. In the process of the problem analysis, other
potential safety issues were identified. The issues and their proposed resolutions
have been reviewed and a plan to test the resolutions has been developed. Testing
recommenced in late April 2003. Once testing is complete, a decision on lifting the
suspension on the TLS Type Acceptance will be made.
Given the possibility that the results of the reevaluation may require substantial
technical changes, additional installations of TLS will be delayed until after this
process is complete.
Question 2a. Is there anything FAA can do to streamline the site evaluation proc-
ess, such as conducting the various layers of analysis in parallel rather than sequen-
tially?
60
Answer. The site evaluation process includes an initial site survey and a geo-
graphic survey. Initial site surveys are conducted to ensure that the FAA under-
stands the needs of the site, and that the airport understands the requirements of
a precision approach. Following the initial site survey, FAA can advise an airport
whether it would be a suitable location for ILS (public approach) or TLS (special
use approach, not for public use). The geographic survey is then performed so that
an approach procedure can be developed for the desired landing system.
FAA has found that concurrent TLS initial site surveys and geographic surveys
would not be prudent because, during the conduct of the initial site surveys, several
airports chose to decline any further consideration of a potential TLS at their facil-
ity.
To accelerate the site evaluation process the FAAs contract with ANPC includes
the geographic survey, which is normally performed by National Geodetic Survey
(NGS). Because ANPC can prioritize the survey for the installation of its own prod-
uct, TLS, this approach has significantly reduced the time required in the site eval-
uation process.
Question 2b. Is the FAA shouldering costs related to Type Certification to the
same extent as it does for other navigation aids?
Answer. ANPC submitted the TLS for a regulatory approval as an instrument
landing system but it is not an FAA required system. The FAA has never paid de-
velopment, testing, installation or other costs to any other manufacturer for a navi-
gational aid submitted for regulatory approval. The development of the TLS is the
responsibility of ANPC, as it would be for the developer of any system not required
by FAA. Issues related to type acceptance determination and associated costs are
also the responsibility of ANPC. FAA was, however, directed by Congress to procure
the systems, so we established a contract with ANPC to acquire TLS for the test
program.
Question 3. The FAA has determined that, at least initially, TLS use will be lim-
ited to commercial airline and charter air service operators. General aviation opera-
tors will be excluded, even though some general aviation pilots may well have train-
ing and equipment that enables them to operate on a par with commercial airline
and charter pilots, and even though general aviation represents the majority of po-
tential users at many of the small airports where TLS is to be installed. Nearly a
year ago, then-Administrator Garvey explained in a letter to me that as the agency
gains experience with TLS operation, it may be possible to allow for a larger pilot
population to use TLS landing capabilities. What progress has the FAA made on
this front? When will it consider expanding TLS use to some classes of general avia-
tion operators?
Answer. The FAA type accepted the TLS as a Special Use (not for public use) sys-
tem. Restrictions to the type acceptance were necessary, because technical limita-
tions that are inherent to the TLS design result in operational risks, such as the
potential for improper guidance, the potential for signal loss that would result in
missed approaches and the potential for error due to the introduction of a human-
in-the-loop.
FAAs approach to mitigating the operational risks included limiting the use of
TLS to Part 121 and Part 135 operators, because they can be held to TLS-specific
training and operations standards that we cannot legally impose on Part 91 opera-
tors. Additional restrictions to mitigate risks include requiring each aircraft using
TLS to have a pilot and a co-pilot, requiring the use of two radios, requiring a cross-
check of TLS guidance with an alternate source of guidance, and establishing cri-
teria for siting a TLS.
The FAA intends to conduct a two-year operational evaluation after the first com-
missioning to validate the siting and operational limitations and to determine what
adjustments would be appropriate. Prior to the suspension of the TLS Type Accept-
ance, general aviation applications were to be assessed on a test-case basis during
an evaluation period. However, as a result of the system safety assessment and res-
olutions, additional procedural mitigations have been introduced that make it
unfeasible to consider general aviation operators at this time.
Question 4. There appears to be some confusion amongst aviation interests in my
State about the authority and role of Designated Engineering Representatives
(DERs) in approving supporting certification data. The regulations seem to say that
DERs have approval authority, but I am told that FAA personnel at Aircraft Certifi-
cation Offices sometimes re-analyze the data from scratch nonetheless, resulting in
significant delays. What is FAA policy on this matter?
Answer. DERs assist the FAA by examining data and finding compliance on be-
half of the FAA. The FAA determines when and how DERs will be used and how
much DER activity will be reviewed as part of DER oversight and specific project
61
management. The FAA retains the authority to make compliance findings on the
safety-critical, complex, controversial and new technological applications and does
not delegate those aspects of design approvals. The bulk of the work completed by
designees is routine and the FAA has a high degree of confidence in their technical
ability to make the correct finding.
The amount of delegation to DERs and the amount of review of DER-approved
data depends on several factors. A project that deals with new technology or a high
level of complexity may dictate more FAA involvement in the form of direct FAA
finding or review of findings delegated to a DER. A DER who is less experienced
or unfamiliar to the FAA project office would also warrant less delegation and more
review. There is no minimum or maximum quantity of data review specified in FAA
policy, but DER performance evaluation depends on some review of DER data sub-
mittals.
DER approved data is sampled and reviewed by the FAA in order to identify prob-
lem areas and ensure the DER work is satisfactory. Data is not re-analyzed from
scratch, but the reviewed data must clearly substantiate the finding that the DER
made on the FAAs behalf. If the reviewed data is poorly documented or substan-
tiated, then additional data will likely be required. Re-submittal of satisfactory data
may result in project delays but such delays are rare and are usually avoided by
up-front technical exchanges between the FAA and the applicant and DER.
RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. MARIA CANTWELL TO

MARION C. BLAKEY
Question 1. The Aerospace Commission states that the transformation of the U.S.
air transportation system is a national priority. Specifically, the Commission has
called for rapid deployment of a new, highly automated Air Traffic Management
system that will better accommodate the increasing number and variety of aircraft
in the system.
I am very interested in seeing this recommendation implemented to ensure the
economic security of our country. Can you tell me what resources and technologies
your agency is investing in this project?
Answer. The Federal Aviation Administration (FAA) is firmly committed to de-
ploying a new, highly automated air traffic management system as called for in the
Commission report. The FAA Strategic Planthe blueprint for the FAAs activities
for the next five years and beyondemphasizes that the continued development of
a modern and efficient air traffic system is absolutely essential. Two of the principal
components of the FAAs strategic plan are the continued safe operations of a grow-
ing and diverse air traffic system and the continued growth in system capacity.
These objectives, which are critical to the future of the National Airspace System,
can only be obtained by continuing to develop a modern air traffic system.
Much of the emphasis of our work in more aggressively reaching these goals is
in leveraging technologies currently in development and moving faster on those that
are ready for deployment. By this approach we feel we can more rapidly achieve the
kind of air traffic management system envisioned by the commission.
Another facet of our work is more long term and involves coordinating the aero-
nautical and automation research efforts of several different agencies in govern-
ment. As stated in the report, it is vitally important that the FAA, the National Aer-
onautics and Space Administration, the Department of Defense, the Department of
Homeland Security, the Office of Science and Technology Policy, and the Depart-
ment of Commerce develop more effective mechanisms for collaborative research.
This is critical for developing and deploying the cutting edge technologies that will
support the future development of our air traffic system. At the moment, we are
working closely with each agency to establish agreements and structures to see that
this happens.
Question 2. The Aerospace Commission emphasized the importance of Federal in-
vestment in research and development to maintaining our nations strength in the
commercial aviation industry. I know that the FAA plays an important role in re-
search on a number of issues pertaining to aircraft infrastructure, including cooper-
ative research efforts with the aviation industry. As the aircraft industry has begun
to work increasingly with advanced materials to design faster and more efficient
planes, I know that there is increasing excitement in the industry in applying devel-
opments in advanced materials.
I am very interested in the burgeoning field. Can I assume that you would be in-
terested in working with industry further to develop techniques to maintain and en-
sure durability of these materials in the future, along the lines of the Center of Ex-
62
cellence programs currently in place for such technologies as airport technology and
computational modeling?
Answer. We are always interested in working with industry to develop new tech-
nology. Five years ago the FAA established a Center of Excellence in Airworthiness
Assurance (AACE). The Center of Excellence currently has 28 university members.
One of the Centers principal research areas is in the durability and damage toler-
ance of advanced materials. One example of how the Centers university research
organizations are working with industry is in the maintenance and repair of ad-
vanced material sandwich structures. These are used in nacelles and control sur-
faces on transport aircraft, as well as fuselages on commuter and general aviation
aircraft. Boeing is a full partner in this research initiative, supplying their man-
power and fabrication expertise.
Question 3. In the Administrations proposed reauthorization language you em-
phasize projects of national significance. In the case of many of those projects, such
as the third runway at SeaTac Airport, the cost of the project has increased sub-
stantially due to federal and state requirements for environmental mitigation. Will
there be recognition of these increased costs in your funding allocations for these
projects of national significance?
Answer. We recommended, in our proposal, to establish a fund for nationally sig-
nificant projects with a significant funding level. We made this recommendation be-
cause the existing formulas do not produce a high enough level of discretionary
funding to provide adequate Federal support for large projects such as the new run-
way at SeaTac airport. We would anticipate using the new fund to provide more as-
sistance where the cost of the project has increased significantly or to provide a
higher level of funding for projects from the outset.
Question 4. The Administrations proposal converts the noise set-aside portion of
the AIP funds to nine percent of the total AIP program. Will that be enough to con-
tinue to fund the noise mitigation programs at airports such as SeaTac, where the
airport and the FAA have committed to a significant program for residential and
school noise mitigation?
Answer. The Administration proposed the conversion of the noise set-aside to nine
percent of the total AIP program in order to ensure that the funding is both ade-
quate as well as stable. Under the existing formula, the noise set-aside is subject
to the overall AIP level and also rising entitlement funding. Under existing law, the
noise set-aside can show a downward trend as passenger traffic increases, which in-
creases the entitlement based upon boarding passengers. Under the Administration
proposal, the noise set-aside would only be affected by the overall AIP funding level.
RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. FRANK LAUTENBERG TO

MARION C. BLAKEY
Question 1. Do you think it is a good idea to move toward a private takeover of
air traffic control? Do you think the public would support this move?
Answer. I strongly support the Secretarys decision that the air traffic control
functions performed at FAAs en route and larger terminal facilities (i.e., facilities
larger than those currently in the contract tower program) are a core capability of
the Federal Aviation Administration (FAA). However, prohibiting the conversion of
any government-provided air traffic control functions to the private sector is unnec-
essary and would hinder the efficient management of the FAAs air traffic control
and related responsibilities by preventing the FAA from making strategic decisions
on how best to perform its mission. Certain FAA responsibilities are best fulfilled
by contract, or using a combination of government and private servicesas is the
case today. Congress gave the FAA unique procurement authority for exactly this
reason. For example, the FAAs air traffic control systems are increasingly composed
of commercial components and software that build upon privately developed com-
puter programs. In many instances, the developers of these components and soft-
ware are unwilling to sell to the FAA the data rights necessary for FAA to maintain
these items, or will only sell the rights at an exorbitant price.
Question 2. I understand that the Federal Aviation Administration (FAA), by di-
rection of the Office of Management and Budget (OMB) is conducting a study for
contracting out flight service station controllers. To date, how much has been spend
on this study? How much is this study expected to cost? Which FAA budget is fund-
ing this study: Operations or Facilities and Equipment (F&E)?
Answer. The FAA is in the planning phase of the competitive sourcing review of
Automated Flight Service Stations (AFSS) located in the continental United States,
Puerto Rico, and Hawaii. To date, $1.6 million from our Facilities and Equipment
63
(F&E) account and $1.2 million from our Operations account has been spent on the
study. Activities related to NAS modernization are being paid out of F&E while all
other activities are being paid out of Operations.
We plan to fund the study at approximately $4,000,000 in FY 2003 and it is an-
ticipated that the cost of running the study in FY 2004 will be approximately $6
million.
Question 3. With regard to the FAAs NAS Implementation Support Contract
(NISC), the Department of Transportation Office of Inspector General (IG), in its re-
port #AV2003002, found that 22 percent of contract personnel reviewed did not
meet contract requirements for education and experience. I understand that the IG
has recommended that the FAA perform a complete review of all contract employees
to ensure that they are qualified. Has the FAA completed this review? What type
of reviews does the FAA now perform on its contract employees agency-wide to en-
sure that all contract employees are qualified? Generally, what is the FAA doing to
ensure adequate contractor oversight?
Answer. The NISCII program office completed a review of all contract personnel
who were charging labor hours on NISCII task orders. This review did not reveal
any additional contractor employees who were not qualified for the labor category
to which they were assigned or did not otherwise have a sufficiently documented
waiver.
Currently, FAA requires contractors to provide evidence that their employees
meet the qualifications for the labor categories that FAA has established under the
contract. Most requests for proposals (RFPs) include provisions that contain the
qualifications required for contract positions (e.g., education, certifications, years of
experience). In some instances, the RFPs and resulting contracts also contain provi-
sions that require persons in key positions to provide FAA with their resume as well
as a commitment that they will work on the particular project for a sufficient
amount of time to ensure its continuity and success.
The level of our surveillance of contractors varies in accordance with the nature
of the work, the type of contract and the period of performance. In general, FAA
conducts periodic audits to make sure that contractors are charging us only for work
conducted by appropriately qualified people. Cost-Reimbursable contracts, like the
NISC-II, have stringent reporting requirements, because costs are not fixed. Addi-
tionally, the NISC II contract type, cost plus award fee, motivates and rewards the
contractor for cost control. Other large contracts that provide incentives to the con-
tractor also require similar stringent milestones and reporting and evaluation re-
quirements.
Question 4. Could airport authorities benefit from using Airport Improvement Pro-
gram (AIP) funds to purchase airport development rights? What are the advantages
and disadvantages of such a policy?
Answer. We believe that the purchase of airport development rights would be one
method of ensuring that a privately owned airport remains an airport in perpetuity.
As we understand the proposal, the State government would purchase these rights
from the private owner in lieu of the purchase of the airport in fee simple. Thus,
the main advantage is that costs should be much less. If AIP funds are used, the
proposal should restrict the ability of the State to resell these development rights.
It should also provide that the Secretary can permit a State to sell the development
rights if the airport is no longer needed or if it is in the public interest.
Question 5. What was the justification for a 27.6 percent budget estimate increase
in spending on contract maintenance from fiscal years 2002 to 2003? What is the
estimate for Fiscal Year 2004? If this estimate varies from the Fiscal Year 2003 en-
acted appropriation level, please explain why.
Answer. The estimate for FY 2004 is $73,581,615, which represents a 30 percent
increase over the FY 2003 enacted appropriation level. The increase in contract
maintenance is due to the commissioning of newly acquired National Airspace Sys-
tem (NAS) systems hardware.
FAA considers a number of factors when deciding to use contract maintenance
and/or in-house staffing. Some of these factors are the expected life of the system,
the level of integration with other NAS systems, and the degree of commercial off-
the-shelf (COTS) hardware and software in the system. Sometimes contract mainte-
nance is used only as an interim measure to allow time for FAA technicians to be
trained and spare parts to be stocked at the FAA Logistics Center for in-house
maintenance. However, when the characteristics of particular systems dictate, con-
tract maintenance will be utilized for the full life of the system. In some cases, a
combination of contract maintenance (contractor supplies and repairs of lowest re-
pairable units) and in-house staff will do all maintenance tasks.
64
An example of FAA choosing to have the contractor maintenance for the life of
the equipment is contained within the FY 2004 request. We are requesting
$9,298,000 for Facility Security Risk Management. This is for contract maintenance
of electronic facility security equipment such as closed circuit television, access con-
trol devices and intrusion detection systems. Equipment such as this is not inte-
grated with other NAS systems, has a short life span and is commercial-off-the-shelf
(COTS), thereby use of contract maintenance is more cost effective.
The HOST Oceanic Computer System Replacement (HOCSR) program is request-
ing an additional $3,630,000 for contract maintenance. This system uses a combina-
tion of contract and in-house staff performing maintenance. In-house maintainers
are responsible for system certification and contractors are used for COTS repair.
Contract maintenance costs are expected to continue to grow as new systems and
functionality are added to the NAS.

READ C. VAN DE WATER
Question 1. This committee is very concerned about competitive access issues in
the airline industry. One tool we have tried to use to address this concern is the
competition plans we require of certain large airports.
Do you believe these plans are useful?
Do you believe they could be improved?
The Administration bill did not include any recommendations in this area. Ap-
parently proposed changes to the competition plans requirement are still being
considered within the Administration. When can we expect such changes to be
transmitted to Congress?
Answer. All air carriers should be treated fairly. For this to occur, airport policies
and business practices must be transparente.g., all air carriers, not just the domi-
nant carrier, should receive timely notice when gates and other facilities become
available at an airport. When transparency exists, all air carriers, large and small
alike, are able to compete on fair and equal terms. The competition plan require-
ment is an essential tool for ensuring that airport policies and practices do not un-
fairly disadvantage any air carriers
We are confident that the competition plan requirement is reducing entry barriers
at concentrated airports. We base this conclusion on the actions airport officials
have taken to reduce entry barriers at their airports and the discussions we have
had with airline managers who are attempting to gain access to or expand service
at concentrated airports. The attached paper provides a partial list of the competi-
tive policies certain airports have adopted since the competition plan requirement
has been in effect. But despite our successes, some airports still retain business
practices that make it difficult for smaller air carriers to gain access to the full
range of airport facilities or to expand service on terms equivalent to those enjoyed
by incumbent carriers.
The FAA and OST staff devote a considerable amount of time to reviewing airport
competition plans and offering suggestions as to what actions airport officials could
take to reduce entry barriers at their airports. The competition plan process is tar-
geted to address cited complaints and similar practices that may impede or prevent
competitive entry. The practices that must be described are those considered to be
essential for ensuring robust airline competition and were chosen to avoid undue
burdens on airports; indeed, to reduce the regulatory burden, airports are now re-
quired to submit competition plans every 18 months, as opposed to every 12 months.
The Department has submitted to Congress a proposal for enhancing the competi-
tion plan requirement. This proposal is intended to be added to the Administrations
proposed Flight100 bill.
Attachment
AIRPORT COMPETITION PLANSHighlights of Reported Actions to Reduce

Barriers to Entry and Enhance Competitive Access
I. AVAILABILITY OF GATES AND RELATED FACILITIES
Major Elements of Competition Plan
Number of gates available at the airport by lease arrangement.
Samples of gate use monitoring charts.
Description of the process for accommodating new service and for service by a
new entrant.
65
Description of any instances in which the PFC competitive assurance #7 oper-
ated to convert previously exclusive-use gates to preferential-use gates or has
it caused such gates to become available to others.
Policy regarding recapturing gates that are not being fully used.
Resolution of any access complaints during the 12 months preceding the filing.
Use/lose or use/share policies for gates and other facilities.
Plans to make gates and related facilities available to new entrants or to air
carriers that want to expand service at the airport.
Availability of an airport competitive access liaison for requesting carriers, in-
cluding new entrants.
The resolution of any complaints of denial of reasonable access by a new en-
trant or an air carrier seeking to expand service in the 12 months preceding
the filing of the plan.
Significant Airport Responses
Asserting control over underutilized gates.
Designating Competition Access committees.
Adopting more entry-friendly leasing terms.
Removing specific access protections for signatory carriers.
Providing new entrants with informational packages regarding airport access.
Monitoring gate use.
Streamlining forced accommodation process.
Highlights of Recent Actions Reported by Individual Airports:
AnchorageConverted from exclusive to preferential leases upon expiration of ex-
clusive leases; created Competitive Access Team; uses web site to publish gate
utilization information.
AtlantaProvides handbook with airport information to requesting carriers and is
invoking recapture authority for unused facilities.
BWIDeveloped Airline Accommodations Committee consisting of air service devel-
opment, operations, planning and commercial management offices.
BurbankDesignates official as new entrant liaison and provides guidance package.
CincinnatiUsing Competition Plan Coordinator to develop procedures and time
lines to respond in a timely manner to requests for accommodation.
ClevelandCompetition Task Force established to ensure implementation of com-
petition plan and pursue expansion and growth options; will develop new en-
trant handbook; assigns Administrative Officer to each airline to monitor sub-
lease activity, assess operational needs to ensure efficiency of use.
DetroitAdopted a policy to override strict exhaustion of efforts clause in its lease
provision by assisting a requesting carrier to ease any burden and reduce un-
necessary delays associated with acquiring gates and related facilities when
the airport is unable to provide those facilities.
Houston Hobby/IntercontinentalRenegotiated long-term, exclusive use leases to
shorter term, preferential, minimum-use leases (at some terminals) with com-
mitment on part of airport to facilitate inter-carrier accommodations upon re-
quest of interested airline; developed Welcome Letter package to include gate
usage information and a general Dispute Resolution Policy Statement, as well
as other pertinent information.
MilwaukeeRemoved potential obstacle for accommodation that enabled a signatory
carrier to refuse to accommodate a direct competitor.
MinneapolisUndertook Competitive Marketing initiatives with low-fare carriers
and created short-term gates with preferences for new entrant carriers; cre-
ated new entrant package with plans to publish information package on web
site.
NashvilleStreamlining exhaustion of efforts requirement by using web site to en-
courage new entrants to contact airport directly, assists carrier with vol-
untary accommodation and negotiations, under a timeline; intends to recap-
ture vacant leased gates upon request of another carrier.
NewarkInitiated review of Master Airline leases, identified provisions enabling
airport to regain more control over the use of gates; moved to recapture gates
or to force accommodation on gates, based on utilization study; streamlined
forced accommodation clause by removing an exhaustion of efforts; appointed
New Entry Manager and developed New Entrant Airline Rights package.
OaklandInstalling common use ticketing equipment at ticket counters and gates
so that all airlines operating there will use identical gate check-in and gate
CUTE equipment, thereby providing maximum flexibility in assigning gates,
66
even on a per flight basis, thereby increasing the opportunities for competi-
tion; provides Airline Entry Package and airport facilitates negotiations be-
tween requesting carriers and incumbents.
ProvidenceFacilitates gate sharing requests and will not enforce lease clause re-
quiring requesting airline to contact all signatories.
SacramentoIs formalizing gate availability information by preparing an Airline In-
formation Package containing information on available gates, terms of access,
and procedures for securing facilities for new service, to be made available on
the airports web page and upon request.
Salt Lake CityStart Up Package provided to requesting carriers includes a gate
utilization report summary, a statement about the airports dispute resolution
practices, as well as other necessary information about operating at the air-
port.
San AntonioNegotiated expiring lease to provide for preferential-use; Aviation De-
partment assists requesting airlines in gaining access.
San FranciscoInvoked forced accommodation clause to ensure that temporary gate
needs of new entrant airlines were met.
San JoseEstablished a Tenant Liaison Committee to respond to requests for ac-
cess within a reasonable time, gather appropriate information, meet with rel-
evant airport personnel, provide gate utilization information to requesting air-
line, and act as an intermediary between prospective airline and incumbent
airline to expedite accommodation; assigned Property Management personnel
as first point of contact.
San JuanDeveloping policy on gate use and monitoring requirements to be applied
to all gates, drafting sublease guidelines and requirements, developing com-
plaints and disputes resolution policy and developing a master lease incor-
porating the referenced policies and procedures.
II. ARRANGE FOR LEASING AND SUBLEASING
Whether a subleasing or handling arrangement with incumbent carrier is nec-
essary.
How the airports assists requesting airlines to obtain a sublease or handling ar-
rangement.
Airport oversight policies for sublease fees.
Process by which availability of facilities for sublease or sharing is commu-
nicated to other interested carrier.
Airport policies regarding sublease fees.
How complaints by sub-tenants about excessive sublease fees are resolved.
How independent contractors who want to provide such service as ground han-
dling are accommodated.
Formal dispute resolution procedure.
Beginning to develop dispute resolution process.
Asserting more control and oversight over sublease fees, terms, and conditions.
Imposing sublease caps on administrative fees.
Reviewing and/or pre-approving subleases.
Notifying carriers of gates available for subleases.
AlbuquerqueAdopting dispute resolution procedures.
AnchorageRequires airport approval and caps administrative fees; adopting dis-
pute resolution procedures.
AtlantaAdopting dispute resolution procedures.
AustinRequires airport approval and caps administrative overhead fees.
BWICaps fees and requires airport approval.
Chicago OHareAdopting dispute resolution procedures.
Chicago MidwayGate committee is developing dispute resolution procedures for
use on domestic gates.
ClevelandPre-approves subleases, caps fees; common-use gate protocol manages
gate occupancy times and fines user for failure to comply; adopting dispute
resolution procedures.
Dallas Love FieldAdopted a policy to cap sublease administrative fees.
Dallas-Fort WorthAdopting dispute resolution procedures.
67
DenverAdopting dispute resolution procedures.
DetroitCaps sublease fees for forced accommodation arrangements; requires air-
port approval for subleases with new entrants; gate utilization policy assures
that subtenant will not be disadvantaged by a schedule change of the tenant.
Houston Hobby/IntercontinentalWill initiate the development of a formal dispute
resolution process.
KahuluiRequires pre-approval of a sublease and discourages excessive sublease
rents.
MemphisAdopting dispute resolution procedures.
NewarkIs developing more formalized procedures for hearing complaints in addi-
tion to considering complaints at station manager or airlines affairs meetings.
OaklandRequires airport managers pre-approval for sublease or assignment; re-
stricts amount of assigned space that may be assigned or sublet to another
airline; caps fees.
OntarioIs developing a Gate Use Committee to resolve disputes, set timeline for
appeals
Palm BeachPre-approval required for subleases; airport has authority to recapture
subleased facilities when they represent over 50 percent of the tenants lease-
hold; caps administrative fees; adopting dispute resolution procedures.
RenoAdopting dispute resolution procedures.
San AntonioAdopting dispute resolution procedures.
Saint LouisAirport consent required for subleases; ground-handling fees are sub-
ject to airport oversight; preferential-use sublease terms and fees subject to
airport oversight; will address sublease markups in new airline use agree-
ment.
San JoseDeveloped an Airline Access Complaint form and established procedures
for resolving complaints within a reasonable time. Also oversees sublease fees
per revised lease and applies, as a matter of policy, sublease fee caps on sub-
leases executed under older master lease.
San FranciscoAdopting dispute resolution procedures.
Washington DullesRequires prior approval of subleases and handling agreements;
caps sublease fees.
III. PATTERNS OF AIR SERVICE
Markets serviced.
Small communities served.
Markets served by low-fare carrier.
New markets added or dropped in past year
Using market analysis to add competitive services.
Using marketing tools to attract low-fare services.
AlbuquerqueInstituted New Entrant Promotional Program as an incentive to pro-
mote competition.
CharlottePerformed a Competitive Air Service Assessment indicating possibilities
for adding low fare carrier service on certain routes; implemented marketing
plan to attract additional service.
Palm BeachEliminated surcharge on use of common-use gates for a seasonal or
temporary basis; is conducting an air service enhancement campaign to in-
crease the air service opportunities available at its airport and to enhance the
revenue-generating opportunities for airlines.
PittsburghProvides Airline Information Package; adopted Air Service Marketing
Incentive Program to encourage new and competitive air service for existing
and new carriers.
RenoNew Airline Incentive Policy implemented; Business Development and Prop-
erty Administration Division coordinates the accommodation of services and
facilities for new entrants, including assisting in negotiations with incumbent
signatory airlines and participation in incentive programs.
IV. GATE ASSIGNMENT POLICY
Method of informing carriers of gate assignment policy.
Methods for announcing to carriers when gates become available.
Policies on assigning RON positions.
68
Adopting gate assignment protocols with consideration for new entrants.
Changing signatory policies to lessen burdens on new entrants.
Notifying all carriers of gate availability.
AnchoragePosts gate utilization information and availability on web site; is re-
quired to post public notice prior to leasing space.
AtlantaWill add link to web site for tenant information; will post information on
underused gates after gate use surveys.
BWIWill revise policy to offer signatory status to any airline willing and qualified
to assume substantially similar obligations as those required of a signatory
carrier when, due to the physical space limitations at the airport, that airline
is otherwise precluded form leasing a full complement of space. Also, will post
gate/hold room availability information on its web page and will advertise an-
nouncements of gates.
CharlotteNon-signatory/new entrant landing fee is the same as a signatory land-
ing fee.
Chicago OHareNotified all carriers by facsimile of availability of common-use
gate.
Houston IntercontinentalReassigned underused leased space to an incumbent air
carrier for its expansion.
MiamiProhibits carriers from controlling gate assignments and from transferring
or assigning ticket counter positions; requires sharing of contiguous and un-
derutilized ticket counters.
NashvilleWill post information on gate availability on its web site.
NewarkNotified interested subtenant carriers of potential gate availability during
Master Lease Utilization review process; adopted common use procedures (for
use to resolve competing interests in a gate) with a priority to new entrants
offering competitive services.
OaklandProvides written notification to airlines as gates become available and in-
cludes estimate date of availability; requesting airlines must provide current
and planned schedule information.
PhiladelphiaIntends to assign new gates on basis of accommodating competitive
airline service, considering, among other factors, whether airline is a low
fare airline, nonstop markets, size of aircraft, frequency of operations, etc.
PittsburghFor PFC-financed gates, airport will give priority to new, competitive
airline service; signatory fee status not dependent on minimum leasehold.
PhoenixIs studying the development of contractual and/or regulatory tools to allow
airport to better coordinate gate-sharing opportunities; provides gate use and
schedule information to prospective entrant carriers; provides New Entrant
Information package, containing gate utilization information, to prospective
entrant to enable it to make informed decision on which incumbent air car-
riers to contact for shared gate agreements.
SacramentoReplaced County ordinance gate assignment process with a lease
agreement providing for short-term, preferential-use leases subject to airport
reassignment; is developing Airline Information Package to be provided on
airports web page.
Saint LouisSignatory status is available to subtenants; gate assignment proce-
dures will be published on web site; simultaneously advises all carriers of
gate availability; will use its web site to publish relevant information for serv-
ing airport; is developing and placing timelines for access; City agent is con-
tact point for City gates as well as facilitating sublease accommodation.
V. GATE USE REQUIREMENT
Gate use monitoring policy.
RON monitoring policy.
Requirement for signatory status.
Minimum requirements for a lease.
Accommodation priorities.
Common-use gate usage policies.
Methods for calculating rental rates for common-use gates.
Developing per-gate use monitoring policies.
Making gate usage information available.
69
Adopting similar minimum utilization requirements for incumbent and new en-
trant carriers.
AnchorageUses its newly installed Multi-User Flight Information Display System
(MUFIDS) to identify space to fill specific requests as they arise and to deter-
mine which gate are subject to recapture; information is made available upon
request and on web site; RON positions are monitored through ground han-
dler.
Chicago MidwayMonitors gates on a per-gate basis to track airline compliance
with preferential lease utilization requirements, implement shared-use provi-
sions, develop gate use procedures, and analyze construction phasing, and de-
velop utilization criteria. Also used to schedule airport services such as park-
ing, custodial services, concessions and security.
Dallas-Fort WorthInstituted formal Gate Monitoring and Reporting Procedures,
under auspices of a Gate Monitoring Task Force, in support of PFC competi-
tive access assurance, using FIDS-produced monthly gate activity reports and
flight activity reports, for summary daily gate utilization activity by gate and
terminal.
DenverWill negotiate a narrower preferential gate availability window with its
hubbing carrier and will review the use/lose provisions to ensure they are pro-
competitive; drafted 5 Year Strategic Business Plan.
DetroitFormulated a policy for (1) a gate allocation package that will chart sched-
uled daily and weekly departures per carrier and (2) an on-going gate moni-
toring program to determine whether minimum utilization is met.
MiamiHas an active gate-monitoring program to control gate assignments on a
daily basis.
MinneapolisGenerates bimonthly gate plot based on scheduled gate usage, modi-
fied to reflect actual usage.
OaklandMonitors gate usage and analyzes and maps flight schedules on a weekly
basis to determine availability of space and minimum gate usage, for pur-
poses of determining whether to exercise the 30 day revocation process for a
preferential-use gate permit.
Palm BeachMonitors common-use gate utilization and uses airline provided
monthly reports and airport daily monitoring to oversee preferential-use gate
usage to determine whether a reallocation of gates should be undertaken to
better balance user needs with terminal capacity, and for marketing purposes,
that is, identifying high demand or un-served demand markets.
PittsburghUses new software to monitor gate usage on all gates and to identify
opportunities to accommodate new entrants and maximize facility utilization.
PhoenixPerforms periodic studies of flight schedules to monitor gate utilization;
will use the studies to communicate gate availability to prospective entrant
carriers and will incorporate it in new entrant airline packet; will also use
studies to better manage and adjust operating schedules for terminal food
beverage and retail concessions; will perform formal gate utilization analysis
for each carrier when vacancy rates subside.
ProvidenceMonitors gate use relying on airline schedule information; uses this in-
formation to assist a new entrant in identifying a potential signatory carrier
to accommodate it.
Saint LouisMonitors average daily gate utilization through scheduled daily flight
information supplied by airlines; requires monthly gate utilization report in
each short term preferential use permit and for new master preferential lease
to replace that expiring at year end 2005.
VI. FINANCIAL CONSTRAINTS
Major source of revenue for terminal projects.
Use of PFCs for gates and related terminals.
Availability of discretionary income for capital improvement projects.
Using discretionary income for gate projects.
AnchorageNew Airline Operating Agreement permits airport to rate-base capital
projects required to accommodate a new entrant or expanding airline, under
certain conditions.
70
Chicago OHarePurchased exclusive-use gate with discretionary funds and con-
verted it to common use.
VII. AIRPORT CONTROLS OVER AIRSIDE AND GROUNDSIDE CAPACITY
Majority-in-interest (MII) clauses covering projects.
Projects delayed because MII clauses revoked.
Plans to modify existing MII agreements.
Exempting capital projects necessary for competition from MII votes.
NashvilleMay consider, as not enforceable, an MII vote against a development
project for the purposes of excluding competition, when the development
project is necessary for the airport to meet its obligation to provide access on
reasonable terms as required by the AIP assurances.
ProvidenceInterprets MII clause that excludes from MII concurrence projects to
comply with Federal requirements as permitting airport to construct terminal
facilities to enhance competition without MII approval.
VIII. AIRPORT INTENTIONS TO BUILD OR ACQUIRE GATES TO BE
USED AS COMMON FACILITIES
Common-use gates available.
Common-use gates scheduled to be built.
International gates available for domestic use.
Fee differences between international gate use for domestic service and domes-
tic gates.
Carrier reliance on common-use gates.
Utilizing discretionary income to acquire common-use gates.
Adopting common-use gate fees comparable to fees charged for leaseholds.
AnchorageConverted from exclusive to short-term preferential (subject to recap-
ture) and common-use gates.
AtlantaRecaptured a temporary exclusive-use gate for preferential use, and con-
verted one underused preferential-use gate to a common-use gate.
BWIInstalling common use terminal equipment (CUTE) in all common-use gates
to enhanced the ability of airlines to share gates and hold rooms thereby in-
creasing airport capacity.
Chicago OHareConverted exclusive-use gate to common use.
ClevelandAdopted protocol for common use gate with priorities given for (a) use
by existing carrier that does not lease a gate, (b) a new entrant, and (c) an
carrier seeking to expand; would apply this protocol, as needed to exclusive-
use gates. Three gates converted to common use; common use gate legislation
passed by City; gate program management contract developed; protocol adopt-
ed.
Houston Hobby/IntercontinentalUse CUTE system at all ticket counters; IAH has
constructed common-use/preferential-use gates; HOU has common-use gates
and is developing a standard fee for any common gate use to charge sepa-
rately for gate use, ticket counter, and common facility use to eliminate confu-
sion in combined per turn rates).
NashvilleHas several common-use gates available for requesting carriers; airport
will negotiate vacant gate recapture, upon request.
San JoseIs developing a common use philosophy for the design of new and ren-
ovated passenger terminal facilities, including the use of plasma signs, generi-
cally sized gates to facilitate sharing, an integrated data system similar to
CUTE II to be installed at ticket counters and gate podiums, and a shared
baggage screening system.
71
IX. AIRFARE LEVELS AS COMPARED TO OTHER LARGE AIRPORTS
Carrier local passenger, average fare, market share and average passenger trip-
length data.
Data above compared to other airports.
Using fare data to illustrate competitive strength.
Using market share data to attract new service.
Chicago OHareUsing fare data, actively tracks OHares competitive position rel-
ative to other OHare markets.
Palm BeachUsing market share data to highlight market opportunities for new
and incumbent carriers.
30 AirportsPublished Competition Plan, including market-share data, on web
page.
Small Community Air Service Development Pilot Program
Question 2. Your testimony is generally complimentary of the small community
pilot program. The Departments budget, however, does not request any funding for
Fiscal Year 2004why not?
Answer. The Pilot Program was authorized for the three-year period covering fis-
cal years 2001, 2002, and 2003. This fiscal year is the last year the program has
been authorized and the Administration was not, therefore, in a position to seek
funding for the program for fiscal year 2004. However, the Administrations proposal
in its Reauthorization Bill, Flight-l00, includes a provision for small hubs and non-
hubs to seek Federal assistance to improve service at their communities. It differs
from the current program in that it requires a contribution of 25 percent. It also
eliminates the restrictions on the number of communities that can participate and
the state limitations. The broad flexibility and the grant structure have been re-
tained.
Essential Air Service Program
Question 3. Why dont more passengers use EAS-subsidized service?
Answer. As mentioned above, a one size fits all approach has not proven to be
very successful. Providing communities more direct involvement and increased flexi-
bility in meeting their individual needs will better ensure that the service is more
tailored to communities individual needs and, thus, that the maximum number of
passengers will use the service.
Question 4. The Administrations proposed budget for FY 2004 caps EAS spending
at $50 million and modifies the program to include, among other requirements, local
matching funds. What is the anticipated impact of these program changes on air
service to small communities?
Answer. We are proposing a fundamental change in the way that the Government
delivers transportation services to rural America. For too long, many communities
there are a few exceptionshave taken Essential Air Service for granted as an enti-
tlement and done little or nothing to help make the service successful. Requiring
a modest contribution should energize civic officials and business leaders at the local
and State levels to encourage use of the service. Communities will also have many
more service options available to them. Rather than the two or three round trips
per day to one hub that EAS has traditionally provided, we will work with the com-
munities and State Departments of Transportation to procure an appropriate level
of service that is responsive to their needs, whether it is charter service, single-en-
gine/single-pilot service, regionalized service, or ground transportation. As stake-
holders in their service, the communities will become key architects in designing
their specific transportation package.
Under the Administrations Flight100 reauthorization proposal, for the most iso-
lated communities, we will continue to subsidize air service to the extent of 90 per-
cent of the total subsidy required. For the least isolated communities (those within
100 miles of a large or medium hub or 75 miles of a small hub or 50 miles of a
non-hub with jet service), we will be willing to pay for one-half of the cost of surface
transportation. The remaining communities would have to contribute 25 percent of
the total subsidy required.
72
Question 4a. How many communities and passengers are estimated to continue
receiving EAS funding under the Administrations FY 2004 budget proposal? How
many communities and passengers will likely lose subsidized service?
Answer. We expect that approximately 7080 communities, generating in excess
of half a million passengers a year, will retain service, while 5060 communities,
generating 350,000400,000 passengers a year, may lose air service.
Question 4b. Will Alaskan and Hawaiian communities, which face significant geo-
graphic challenges from communities in the Lower 48, be subject to the same pro-
gram changes?
Answer. Communities that are not able to raise the necessary funds would not
automatically be cut off from the national air transportation system. We would take
into account geographic isolation, with particular deference to communities that
have no access to the national transportation system other than by air, such as is-
lands. In addition the funds do not need to come from the community exclusively,
or even at all, but can come from a variety of sources, both public and private. In
fact, we encourage statewide participation by a variety of state agencies, including,
of course, State departments of transportation. Communities could also look to their
chambers of commerce for additional support.
Question 4c. How will these changes affect the regional carriers that currently
rely on EAS subsidies?
Answer. To the extent that not all currently subsidized EAS communities will par-
ticipate in the program, some carriers will lose some routes. However, we do not
expect that any carriers will be materially hurt. In fact, those communities that re-
main in the program should be more aggressive in taking a leadership role in ensur-
ing that the air service is successful.
Question 5. What is the Departments estimate of how much the EAS program
will cost in Fiscal Year 2004 if Congress does not make the programmatic changes
you have proposed?
Answer. The Department has found itself in the past caught among conflicting
statutes: (1) communities entitlements to receive at least a minimum level of air
service; (2) carriers rights not to be forced by the Government to serve communities
at a loss; and (3) the Departments being subject to the Anti-deficiency Act.
As you know, the EAS subsidy makes up the gap between expenses and revenues,
and the attacks of 9/11 caused expenses to increase and revenues to decrease, thus
significantly increasing required subsidy levels. More recently, the Iraq war and
SARS have depressed airline revenues even further. Thus, it is still very unclear
how many additional non-subsidized EAS communities will require subsidy in FY
2004 as a result of the sole remaining carriers filing a notice to suspend the last
service there. Since 9/11, we have received 50 suspension notices27 of them trig-
gering new subsidy. At that rate of newly subsidized communities, it appears that
$113 million will not be sufficient to maintain status-quo service levels.

GERALD L. DILLINGHAM
Question 1. Your testimony notes that it still takes 10 to 14 years to complete a
major runway project. Our bill tries to address this problem by giving the Secretary
tools to accelerate capacity critical projects. How successful do you think our ap-
proach will be? What can be done legislatively and administratively to reduce the
time required to complete runways?
Answer. We believe the measures proposed in the Aviation Investment and Revi-
talization Vision Act (S824) to expedite the environmental review process address
many of the challenges identified in our January 2003 report and should make a
difference in the amount of time it takes to build a major runway project. 1 Com-
pleting the environmental review process, specifically complying with extensive and
duplicative Federal and State requirements and obtaining the necessary permits
was cited as one of the most significant challenges by the airports we surveyed.
However, it is also important to point out that our work shows that airports also
experienced challenges in other phases of the runway process including reaching
agreement the purpose and need during the planning phase and on how to mitigate
the impact of noise and other quality of life issues.
1 U.S. General Accounting Office, Aviation Infrastructure: Challenges Related to Building Run-
ways and Actions To Address Them GAO03164 (Washington, DC)
73
Regarding whether additional legislative or administrative actions are needed, the
Federal Government and airport authorities have undertaken a number of actions
to reduce the time required to complete runways. For example, Executive Order
13274, entitled Environmental Stewardship and Transportation Infrastructure
Project Reviews, is designed to streamline the environmental review of transpor-
tation infrastructure projects by requiring federal agencies that conduct environ-
mental reviews to develop procedures that will allow the reviews to be completed
in a timely and responsible manner. Thus, we believe that Congress should allow
airports to use the existing tools and evaluate the effectiveness of these efforts be-
fore making any additional legislative or administrative changes to the process for
building runways.
Question 2. Do you believe that appointing a Chief Operating Office (COO) will
improve the management of the air traffic control system at the FAA?
Answer. The appointment of a chief operating officer to manage the day-to-day op-
erations of the air traffic control system will be a positive step for FAA and the avia-
tion industry and should, over time, lead to improvements in the overall manage-
ment and delivery of air traffic control services. The Air Traffic Services Sub-
committee, which is responsible for overseeing the Administration and management
of the air traffic control system, called the chief operating officer the lynchpin of
the new performance-based organization. We agree.
As envisioned, the chief operating officer will be held accountable for transforming
FAAs culture to one that is more results oriented and customer focused. Lack of
accountability has been a contributing factor in the on-going problems that FAA has
encountered in modernizing the air traffic control system. While the cultural trans-
formation is expected to take several years, the flexibilities that Congress granted
FAA in the areas of personnel and procurement should help facilitate the chief oper-
ating officers efforts to hold employees accountability for results.
Question 3. If substantial amounts of AIP funds continue to be used for security,
what will be the impact on safety and capacity projects? Where will that put us five
years from now when demand of air travel has returned?
Answer. Continuing to use significant amounts of AIP funds for security projects
could have a profound impact on future airport development including safety and
capacity projects. As we reported in our October 2002 report, using a half billion
in AIP grant funds for new airport security requirements has had some affect on
other airport development projects. 2 FAA had to decrease the amount of AIP grant
funds for capacity, environment, reconstruction, safety, and standards, with the
largest reductions occurring in standards and reconstruction. For example, there
was almost a $156 million decrease in standards projects and a $148 million de-
crease in reconstruction projects. In addition, FAA also deferred three letter-of-in-
tent payments until Fiscal Year 2003 to the following three airports:
Hartsfield International Airport in Atlanta, GA, which is the busiest airport in
the country with almost 40 million enplanements per year and was one of the
most delayed airports in 2000 and 2001, had $10 million for a runway deferred;
Cincinnati/Northern Kentucky Airport in Covington, KY had $10 million for a
new runway deferred; and
Indianapolis Airport in Indianapolis, IN, had $7.5 million for a new apron and
taxiway deferred.
Moreover, if we do not ensure that AIP grants are available to fund capacity en-
hancing projects, such as runways, which take 1014 years to build, the National
Airspace System may not be able to handle air traffic when it returns.
Question 4. The GAO has done a lot of work on management issues at the FAA.
What recommendations do you have in terms of legislative proposals that we should
consider to improve FAA management?
Answer. Before the Congress initiates new legislative remedies, we believe that
FAA should complete the implementation of statutory authorities that the Congress
has already provided, fully address recommendations that we and the Department
of Transportations Inspector General (DOT/IG) have made, and ensure that man-
agement is held accountable for results.
During the last several years, the Congress has provided legislative relief for FAA
to facilitate management improvements in most of its core organizational areas, es-
pecially acquisitions and personnel. In addition, we and the DOT/IG have conducted
extensive program reviews and made numerous recommendations for improvement.
2 U.S. General Accounting Office, Airport Finance: Using Airport Grant Funds for Security
Projects Has Affected Some Development Projects, GAO0327 (Washington, DC)
74
Although FAA has made improvements in some of these areas, many of the prob-
lems that the legislative relief was expected to remedy continue to plague the agen-
cy. As our work has shown, a major factor contributing to the continuation of the
agencys problems is that FAA has not taken full advantage of the legislative relief
that the Congress provided and has not fully addressed many of our and the DOT/
IGs recommendations. The following examples illustrate FAAs incomplete imple-
mentation of its existing statutory authorities and of our recommendations.
In 1995, the Congress granted FAA unique and powerful legislative flexibilities
to improve its major acquisition and workforce management. Our studies have
shown that FAA has not fully implemented these flexibilities. Most notably, it has
not included some critical processes or elements for evaluating results, providing
feedback loops for modifying initiatives as necessary, and holding mangers account-
able.
In 2000, the Congress mandated a new governance structure to accelerate the
modernization and improve the performance of the air traffic control system. One
component of the new structure, the Air Traffic Services Subcommittee, has been
meeting since January 2001 and is working with FAA managers to establish per-
formance metrics for the air traffic control system. However, it is now 2003, and
the other major components of the new governance structure have not yet been im-
plemented.
A key tool for efficient agency management is accurate and timely information on
costs. FAA has been implementing a cost accounting system for several years, but
major components are not yet in place. Furthermore, as we have reported, inad-
equate internal controls place hundreds of millions of dollars at risk of fraud, waste,
and abuse.
To improve its oversight of aviation safety, FAA in 1998 implemented a new and
enhanced safety inspection programthe Air Transportation Oversight System
(ATOS). We found in 1999 that FAA had not finished implementing some critical
steps, such as developing guidance for its inspectors and establishing a database of
inspection findings for use in targeting its inspection resources to the areas of great-
est risk. In 2002, the DOT/IG reported that the programs implementation remains
inconsistent because FAA has not established strong oversight and accountability
procedures, and our recent discussions with FAA point to a need for further im-
provements in its guidance and databases.
Given that FAA has not yet fully implemented the statutory authorities that the
Congress has already provided and has not fully addressed the recommendations
that we and the DOT/IG have made, and given that FAA has not provided for evalu-
ating some of the initiatives that it has implemented, we recommend that before
initiating new legislation, the Congress consider using its oversight and budget au-
thority to ensure the full implementation of FAAs existing statutory authorities, the
implementation of GAO and DOT/IG recommendations, and management account-
ability.
Question 5. The FAA recently revised outward estimates of when its passenger
traffic will reach pre-September 11 levels. Do you believe there is a real need for
immediate infrastructure investment?
Answer. Although FAA does not expect passenger traffic to rebound until 2007,
the current slowdown in the aviation industry and the economy provides a window
of opportunity to prepare for future growth at those airports where congestion and
delays were the most significant in 2000. Moreover, if the type of infrastructure in-
vestment involves building runways then timing is critical given that we found that
it can take between 10 to 14 years to build a runway.

Senate Hearing, 108TH Congress - Faa Reauthorization

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Senate Hearing, 108TH Congress - Faa Reauthorization

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S. HRG.

APRIL 10, 2003

U.S. GOVERNMENT PRINTING OFFICE

For sale by the Superintendent of Documents, U.S. Government Printing Office

ONE HUNDRED EIGHTH CONGRESS

JOHN MCCAIN, Arizona, Chairman

THURSDAY, APRIL 10, 2003

rity projects. To address this, S. 824 includes a new aviation secu-

of other programs on hold, or delaying them, which could create

ponder landing systems and radar coverage to small community

STATEMENT OF HON. JOHN D. ROCKEFELLER IV,

to establish voluntary programs to reduce aviation emissions by

The CHAIRMAN. Thank you, Ms. Blakey. Ms. Van de Water.

fully their air transportation needs as well as the most effective

PREPARED STATEMENT OF HON. READ C. VAN DE WATER, ASSISTANT SECRETARY FOR

The CHAIRMAN. Thank you. Dr. Dillingham, before we proceed to

This finding suggests that initiatives aimed at addressing other

stances in which internal control weaknesses in FAAs purchase

Large hub 31 $4,855 $8,554

Total 3,364 $9,245 $14,980

Airports Ability to Fund Planned Capital Development Has Improved

The CHAIRMAN. Thank you, Dr. Dillingham. Senator Stevens.

STATEMENT OF HON. TED STEVENS,

and certainly in terms of improvements we will have some prob-

The CHAIRMAN. Thank you. Dr. Dillingham, do you have any

then you created the Small Community Transportation Service,

thinking 4. What difference does it make? What would be the pre-

to provide rent-free space for FAA or TSA. I think there is a big

STATEMENT OF HON. FRANK LAUTENBERG,

So I was so surprised to hear that the Administrations air traffic

or doing the work at an airport and saying, well, we have been a

FY 2004 Funding ($ in millions)

Facilities & Equipment 2,916 2,916

Total 14,007 14,007

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. ERNEST F. HOLLINGS TO

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. DANIEL K. INOUYE TO

FY 2004 Funding ($ in millions)

Facilities & Equipment 2,916 2,916

Total 14,007 14,007

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. RON WYDEN TO

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. MARIA CANTWELL TO

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. FRANK LAUTENBERG TO

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. JOHN MCCAIN TO

AIRPORT COMPETITION PLANSHighlights of Reported Actions to Reduce

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. JOHN MCCAIN TO

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